Objective: To examine the cost-effectiveness of therapeutic strategies for patients with toxic thyroid adenoma. Design: A decision analytic model was used to examine strategies, including thyroid lobectomy after a 3-month course of antithyroid drugs (ATDs), radioactive iodine (RAI), and lifelong ATDs followed by either RAI (ATD-RAI) or surgery (ATD-surgery) in patients suffering severe drug reactions. Methods: Outcomes were measured in quality-adjusted life years. Data on the prevalence of co-incident thyroid cancer, complications and treatment efficacies were derived from a systematic review of the literature (1966 -2000). Costs were examined from the health care system perspective. Costs and effectiveness were examined at their present values. Discounting (3% per year), variations of major cost components, and every variable for which disagreements exist among studies or expert opinion were examined by sensitivity analyses. Results: For a 40-year-old woman, surgery was both the most effective and the least costly strategy (e1391),while ATD-RAI cost the most (e5760). RAI was more effective than surgery if surgical mortality exceeded 0.6% (base-case 0.001%). RAI become less costly for women of more than 72 years (more than 66 in discounted analyses). For women of 85, ATD-RAI may be more effective than RAI and have an inexpensive marginal cost-effectiveness ratio (e4975) if lifelong follow-up results in no decrement in quality of life. Conclusions: Age, surgical mortality, therapeutic costs and patient preference must all be considered in choosing an appropriate therapy.