This study examined the economic costs associated with racial disparity in preterm birth and preterm fetal death in Michigan. Linked 2003 Michigan vital statistics and hospital discharge data were used for data analysis. Thirteen percent of the singleton births among non-Hispanic Blacks were before 37 completed weeks of gestation, compared with only 7.7% among non-Hispanic Whites (risk ratio = 1.66, 95% confidence interval: 1.59–1.72; p<.0001). One thousand one hundred and eighty four (1,184) non-Hispanic Black, singleton preterm births and preterm fetal deaths would have been avoided in 2003 had their preterm birth rate been the same as Michigan non-Hispanic Whites. Economic costs associated with these excess Black preterm births and preterm fetal deaths amounted to $329 million (range: $148 million–$598 million) across their lifespan over and above the costs if they were born at term, including costs associated with the initial hospitalization, productivity loss due to perinatal death, and major developmental disabilities. Hence, racial disparity in preterm birth and preterm fetal death has substantial cost implications for society. Improving pregnancy outcomes for African American women and reducing the disparity between Blacks and Whites should continue to be a focus of future research and interventions.