The Multicenter Study of Hydroxyurea in Sickle Cell Anemia (MSH) demonstrated the efficacy of hydroxyurea in reducing the rate of painful crises compared to placebo. We used resource utilization data collected in the MSH to determine the cost-effectiveness of hydroxyurea. The MSH was a randomized, placebo-controlled double-blind clinical trial involving 299 patients at 21 sites. The primary outcome, visit to a medical facility, was one of the criteria to define occurrence of painful crisis. Cost estimates were applied to all outpatient and emergency department visits and inpatient hospital stays that were classified as a crisis. Other resources for which cost estimates were applied included hospitalization for chest syndrome, analgesics received, hydroxyurea dosing, laboratory testing, and clinic visits for management of patient care. Annualized differential costs were calculated between hydroxyurea- and placebo-receiving patients. Hospitalization for painful crisis accounted for the majority of costs in both arms of the study, with an annual mean of $12,160 (95% CI: $9,440, $14,880) for hydroxyurea and $17,290 (95% CI: $13,010, $21,570) for placebo. The difference in means was $5,130 (95% CI: $60, $10,200; P = 0.048). Chest syndrome was the next largest cost with a mean difference of $830 (95% CI: $-340, $2,000; P = 0.16). The hydroxyurea arm was also associated with lower costs for emergency department visits, transfusion, and use of opiate analgesics. In total, the annual average cost per patient receiving hydroxyurea was $16,810 (95% CI: $13,350, $20,270) and the annual average costs per patient receiving placebo was $22,020 (95% CI: $17,340, $26,710). The difference in means was $5,210 (95% CI: $-610, $11,030; P = 0.21). The cost of hydroxyurea with the more intensive monitoring required when using this drug appears to be more than offset by decreased costs for medical care of painful crisis and analgesic use. Although the total cost difference was not significant statistically, these results suggest that hydroxyurea therapy is cost-effective compared to placebo in the management of adult patients with sickle cell anemia. If hydroxyurea can prevent development of chronic organ damage, long-term savings may be even greater.