Abstract Background Radiotherapy provides significant benefits in terms of reducing risk of local recurrence and death from rectal cancer. Despite this, up-to-date cost estimates for radiotherapy are lacking, potentially inhibiting policy and decision-making. Our objective was to generate an up-to-date estimate of the cost of traditional radiotherapy for rectal cancer and model the impact of a range of potential efficiency improvements. Methods Microcosting methods were used to estimate total direct radiotherapy costs for long- (assumed at 45-50 Gy in 25 daily fractions over a 5 week period) and short-courses (assumed at 25 Gy in 5 daily fractions over a one week period). Following interviews and on-site visits to radiotherapy departments in two designated cancer centers, a radiotherapy care pathway for a typical rectal cancer patient was developed. Total direct costs were derived by applying fixed and variable unit costs to resource use within each care phase. Costs included labor, capital, consumables and overheads. Sensitivity analyses were performed. Results Radiotherapy treatment was estimated to cost between €2,080 (5-fraction course) and €3,609 (25-fraction course) for an average patient in 2012. Costs were highest in the treatment planning phase for the short-course (€1,217; 58% of total costs), but highest in the radiation treatment phase for the long-course (€1,974: 60% of total costs). By simultaneously varying treatment time, capacity utilization rates and linear accelerator staff numbers, the base cost fell by 20% for 5-fractions: (€1,660) and 35% for 25-fractions: (€2,354). Conclusions Traditional radiotherapy for rectal cancer is relatively inexpensive. Moreover, significant savings may be achievable through service organization and provision changes. These results suggest that a strong economic argument can be made for expanding the use of radiotherapy in rectal cancer treatment.