To assess the cost-effectiveness of laparoscopic cholecystectomy versus open cholecystectomy from the payer's perspective, we estimated the probabilities of potential outcomes of each procedure, associated quality-of-life effects, and related direct medical charges and incorporated these estimates into a computerized simulation model. The model projects that laparoscopic cholecystectomy will be more effective than open surgery in terms of total mortality and quality-adjusted survival, for both sexes and all ages. Projected 5-year cumulative charges are lower for laparoscopic cholecystectomy than for open cholecystectomy ($5,354 versus $5,525 for 45-year-old women; $6,036 versus $6,830 for 45-year-old men), and the differences increase substantially with increasing age. We concluded that laparoscopic cholecystectomy is likely to be less costly and more effective than open cholecystectomy for most patients, as long as it does not routinely require preoperative cholangiography and is not associated with increased professional fees or increased risks of retained stones or bile duct injury.