BACKGROUND Insomnia is associated with worsened clinical outcomes among Alzheimer's disease dementia (AD) patients, increased caregiver burden, and healthcare utilization. OBJECTIVE This study aimed to characterize the incremental healthcare burden of insomnia in AD using real-world data. METHODS A retrospective observational study was conducted on AD patients selected from the IBM® MarketScan Commercial and Medicare Supplemental Databases. AD patients with claims-based evidence of insomnia were direct matched to a non-insomnia cohort based on demographic factors. Healthcare utilization and associated costs were assessed for a 12-month follow-up period. RESULTS A total of 3,500 insomnia AD patients and 9,884 non-insomnia AD patients were analyzed. The insomnia cohort had a higher comorbidity burden at baseline (mean score on Charlson Comorbidity Index 2.5 versus 2.2, p < 0.001) and higher proportions of patients with baseline diagnoses for other conditions including depression: 40%, insomnia cohort versus 25%, non-insomnia (p < 0.001). AD patients with insomnia were more likely to have a claim for inpatient hospitalizations (39.8%versus 32.3%), emergency room services (56.4%versus 48.0%), and skilled-nursing services (42.6%versus 31.9%) (all p < 0.05). Mean total annual healthcare costs during the 12-month follow-up period were significantly higher among AD patients with insomnia as compared to those without. (Mean costs: $37,356 versus $27,990, p < 0.001). CONCLUSION AD patients with comorbid insomnia are more likely to use higher-cost healthcare services such as inpatient hospitalization, and skilled nursing, and have higher total healthcare costs. This real-world analysis provides evidence that AD disease management should consider proper treatment of comorbid insomnia due to the incremental burden and cost implications.