Caregivers’ health literacy has emerged as an important determinant of young children’s health care and outcomes. We examined the hypothesis that caregivers’ health literacy influences children’s oral-health-care-related expenditures. This was a prospective cohort study of 1,132 child/caregiver dyads (children’s mean age = 19 months), participating in the Carolina Oral Health Literacy Project. Health literacy was measured by the REALD-30 (word recognition based) and NVS (comprehension based) instruments. Follow-up data included child Medicaid claims for CY2008-10. We quantified expenditures using annualized 2010 fee-adjusted Medicaid-paid dollars for oral-health-related visits involving preventive, restorative, and emergency care. We used descriptive, bivariate, and multivariate statistical methods based on generalized gamma models. Mean oral-health-related annual expenditures totaled $203: preventive–$81, restorative–$99, and emergency care–$22. Among children who received services, mean expenditures were: emergency hospital-based–$1282, preventive–$106, and restorative care–$343. Caregivers’ low literacy in the oral health context was associated with a statistically non-significant increase in total expenditures (average annual difference = $40; 95% confidence interval, -32, 111). Nevertheless, with both instruments, emergency dental care expenditures were consistently elevated among children of low-literacy caregivers. These findings provide initial support for health literacy as an important determinant of the meaningful use and cost of oral health care.