An estimated 6 to 12 million head lice infestations occur in the United States annually, with children ages 3 to 12 most likely to be affected. There are significant direct costs associated with treatment and indirect costs due to lost time from school. Anecdotal reports suggest that direct costs of treatment are in the hundreds of millions of dollars annually. Indirect costs are also substantial but more difficult to quantify. Examples of indirect costs include missed days from schools that use a “no nit” policy, lost wages for parents who must stay home with children, and costs of daycare for parents who cannot miss work. Contributors to the expense of treating head lice include misdiagnosis, and, consequently unneeded treatment; treatment failure due to misuse of pediculicides or other agents; and developing resistance, particularly to over-the-counter pyrethroid agents. An overview of direct and indirect costs of infestation are included in this review, along with a discussion of factors that lead to misuse and overuse of pediculicides. More accurate diagnosis of head lice infestation may provide the most effective means of controlling the costs of care and ensuring proper use of pediculicides.