The purpose of this study was to compare the effectiveness and cost-effectiveness of photodynamic therapy (PDT) versus surgical esophagectomy and intensive endoscopic surveillance for patients with Barrett's esophagus and high-grade dysplasia (HGD) who are operative candidates. The results of our Markov Monte Carlo model show that PDT increased life expectancy by 1.8 years and quality-adjusted life expectancy (QALE) by 1.65 years when compared to the surveillance strategy. Relative to the esophagectomy strategy, PDT resulted in a greater life expectancy by 0.8 years and 2.17 additional quality-adjusted life years (QALYs). Although PDT cost 20,400 dollars and 7,100 dollars more than surveillance and esophagectomy respectively, the resulting incremental cost-effective ratios (ICERs) of 12,400 dollars/QALY and 3,300 dollars/QALY are within commonly accepted values. These findings were sensitive to the value assigned to the quality of life after PDT, but only at unrealistic values. In conclusion, PDT increases life expectancy and is cost-effective when compared to endoscopic surveillance and surgical esophagectomy.