A random sample of 517 employees was studied to determine differences in health care costs and absenteeism among exercisers and nonexercisers during the start-up of a corporate health and fitness program. Exercise was associated with decreased illness absence among female exercisers (47 v 69 hours, P < .05) and there was a trend for illness absence to be inversely related to advancing age among exercisers, whereas illness absence increased among nonexercisers. Total health care costs among exercisers was lower (male $561, females $639) than among nonexercisers (male $1,003, females $1,535). Due to the large variation in the individual cost, the differences between exercisers and nonexercisers were not statistically significant. Ambulatory health care cost for nonexercisers (males $486, females $883) were significantly higher than the costs for exercisers (males $408, females $243). Because the differences were found upon program initiation, they were thought to be characteristics of exercisers and not due to exercise itself.