Objective: To assess the cost-effectiveness of 3 treatments (tiotropium, salmeterol, and no treatment) in patients with moderate chronic obstructive pulmonary disease (COPD). Methods: A Markov model with a time horizon of 1 year was developed. A hypothetical cohort of 100,000 subjects with moderate COPD with mean age of 65 years, smoking history of 50 pack-years, and disease duration of 9.5 years were included in the model. The efficacy and withdrawal data were taken from published randomized clinical trials. The effectiveness measure was exacerbations avoided per patient per year. Incremental cost-effectiveness ratio (ICER) was calculated as additional cost per patient to prevent 1 exacerbation, compared with the next most expensive option. A payer's perspective was used and only direct costs were included in the study. Sensitivity analyses were conducted to test the robustness of the baseline estimates and study assumptions. Results: The mean annual costs for the no treatment, salmeterol, and tiotropium groups were $392.1, $1268.7, and $1408.6, respectively. The ICER of tiotropium compared with no treatment was $1817.36 per exacerbation avoided, while the ICER of salmeterol compared with no treatment was $2454.48 per exacerbation avoided. Thus, in patients with moderate COPD, tiotropium is more cost-effective than salmeterol and no treatment.