Aim:  To explore the prevalence of potentially inappropriate medication (PIM) use in the elderly, to identify the trends and the patterns of prescribing such medication, and to calculate the associated direct medication cost of such practice in a Saudi hospital. Methods:  This was a retrospective cross‐sectional study of patients who were aged 65 years or older on at least one PIM. The source of our data was outpatient pharmacy prescription records at Riyadh Military Hospital (RMH) for 2002, 2003 and 2004. Beers' explicit criteria for PIM was used to identify these medications. Results:  A total of 20 521 PIM were identified. The prevalence of PIM for 2002, 2003 and 2004 was 2.5%, 2.3% and 2.1%, respectively. A total of 43.6% of the patients had filled a prescription of one PIM, 18% filled two PIM and 38.4% filled three or more PIM. Digoxin accounted for 23.7% of these PIM. The most commonly prescribed medications were cardiovascular medications at 26.7%. The total direct cost that was associated with inappropriate prescribing was 518 314 Saudi Riyals (US$138 217) during the study period. Conclusion:  PIM prescribing in RMH was less compared with what was published in the literature in other countries. It was unclear whether these results reflect the level of elderly healthcare services provided to RMH patients or because of underreporting. Drug utilization review programs, medical education, recruiting physicians and clinical pharmacists who are specialized in geriatrics, finding safer medications or integration of computer software to detect such medications during prescriptions entry can improve the medical services provided to the elderly. Geriatr Gerontol Int 2013; 13: 616–621.