Purpose The objective of this study was to examine the rural‐urban differences in Medicare expenditures on end‐of‐life care for elderly cancer patients in the United States. Methods We analyzed Medicare claims data for 175,181 elderly adults with lung, colorectal, female breast, or prostate cancer diagnosis who died in 2008. The end‐of‐life costs were quantified as total Medicare expenditures for the last 12 months of care including inpatient, outpatient, physician services, hospice, home health, skilled nursing facilities (SNF), and durable medical expenditure. Linear regression models were used to estimate rural‐urban differences in log‐transformed end‐of‐life costs and logistic regressions were used to estimate probability of service use, adjusting for demographics, socioeconomic status, and comorbidities. Findings On average, elderly cancer patients cost Medicare $51,273, $50,274, $62,815, and $50,941 in the last year for breast, prostate, colorectal, and lung cancer, respectively. Rural patients cost Medicare about 10%, 6%, 8%, and 4% less on end‐of‐life care than their urban counterparts for breast, prostate, colorectal, and lung cancer, respectively. Rural cancer patients were less likely to use hospice and home health, more likely to use outpatient and SNF, and they cost Medicare less on inpatient and physician services and more on outpatient care conditional on service use. Conclusions The lower Medicare spending on end‐of‐life care for the rural cancer patients suggests disparities based on place of residence. A future study that delineates the source of the rural‐urban difference can help us understand whether it indicates inappropriate level of palliative care and find effective policies to reduce the urban‐rural disparities.