Osteoarthritis (OA) is a leading cause of chronic pain and disability. Prior studies have documented racial disparities in the clinical management of OA. The objective of this study was to assess the racial variations in the economic burden of osteoarthritis within the Medicaid population. We conducted a retrospective observational study using the MarketScan Multi-site Medicaid database (2012-2019). Newly diagnosed, adult, knee and/or hip OA patients were identified and followed for 24 months. Demographic and clinical characteristics were collected at baseline; outcomes, including OA treatments and healthcare resource use (HCRU) and expenditures, were assessed during the 24-month follow-up. We compared baseline patient characteristics, use of OA treatments, and HCRU and costs in OA patients by race (White vs. Black; White vs. Other) and evaluated racial differences in healthcare costs, while controlling for underlying differences. The multivariable models controlled for age, sex, population density, health plan type, presence of non-knee/hip OA, cardiovascular disease, low back pain, musculoskeletal pain, presence of moderate to severe OA, and any pre-diagnosis costs. The cohort was 56.7% White, 39.9% Black and 3.4% of Other race (American Indian/Alaska native, Hispanic, Asian, Native Hawaiian/Other Pacific Islander, two or more races and other). Most patients (93.8%) had pharmacologic treatment for OA. Inpatient admission during the 24-month follow-up period was lowest among Black patients (25.8%, p<.001 White vs. Black). In multivariable-adjusted models, mean all-cause expenditures were significantly higher in Black patients ($25,974) compared to White patients ($22,913, p<.001). There were no significant differences between White patients and patients of Other race ($22,352). The higher expenditures among Black patients were despite a lower rate of inpatient admission in Black patients and comparable length and number of hospitalizations in Black and White patients, suggesting that other unmeasured factors may be driving the increased costs among Black OA patients.