BACKGROUND: Libya introduced rotavirus vaccine in October 2013. We examined pre-vaccine incidence of rotavirus hospitalizations and associated economic burden among children < 5 years in Libya to provide baseline data for future vaccine impact evaluations. METHODS: Prospective, hospital-based active surveillance for rotavirus was conducted at three public hospitals in two cities during August 2012 - April 2013. Clinical, demographic and estimated cost data were collected from children <5 hospitalized for diarrhea; stool specimens were tested for rotavirus with a commercial enzyme immunoassay. Annual rotavirus hospitalization incidence rate estimates included a conservative estimate based on the number of cases recorded during the nine months and an extrapolation to estimate 12 months incidence rate. National rotavirus disease and economic burden were estimated by extrapolating incidence and cost data to the national population of children aged <5 years. RESULTS: A total of 410 children <5 years of age with diarrhea were enrolled, of whom 239 (58%) tested positive rotavirus, yielding an incidence range of 418-557 rotavirus hospitalizations per 100,000 children < 5 years of age. Most (86%) rotavirus cases were below two years of age with a distinct seasonal peak in winter (December-March) months. The total cost of treatment for each rotavirus patient was estimated at US$ 679 (range: 200-5,423). By extrapolation, we estimated 2,948 rotavirus hospitalizations occur each year in Libyan children <5 years of age, incurring total costs of US$ 2,001,662 (range: 1,931,726-2,094,005). CONCLUSIONS: Rotavirus incurs substantial morbidity and economic burden in Libya, highlighting the potential value of vaccination of Libyan children against rotavirus.