Abstract Background It is estimated that over 70% of patients with suspected malaria in sub-Saharan Africa, diagnose and manage their illness at home without referral to a formal health clinic. Of those patients who do attend a formal health clinic, malaria overdiagnosis rates are estimated to range between 30–70%. Methods This paper details an observational cohort study documenting the number and cost of repeat consultations as a result of malaria overdiagnosis at two health care providers in a rural district of Mozambique. 535 adults and children with a clinical diagnosis of malaria were enrolled and followed over a 21 day period to assess treatment regimen, symptoms, number and cost of repeat visits to health providers in patients misdiagnosed with malaria compared to those with confirmed malaria (determined by positive bloodfilm reading). Results Diagnosis based solely on clinical symptoms overdiagnosed 23% of children (<16y) and 31% of adults with malaria. Symptoms persisted (p = 0.023) and new ones developed (p < 0.001) in more adults than children in the three weeks following initial presentation. Adults overdiagnosed with malaria had more repeat visits (67% v 46%, p = 0.01–0.06) compared to those with true malaria. There was no difference in costs between patients correctly or incorrectly diagnosed with malaria. Median costs over three weeks were $0.28 for those who had one visit and $0.76 for ≥ 3 visits and were proportionally highest among the poorest (p < 0.001) Conclusion Overdiagnosis of malaria results in a greater number of healthcare visits and associated cost for adult patients. Additionally, it is clear that the poorest individuals pay significantly more proportionally for their healthcare making it imperative that the treatment they receive is correct in order to prevent wastage of limited economic resources. Thus, investment in accurate malaria diagnosis and appropriate management at primary level is critical for improving health outcomes and reducing poverty.