OBJECTIVES: This study aims to conduct a cost-effectiveness analysis of glucosamine sulphate treatment as compared to placebo in knee osteoarthritis from the Belgian health care system perspective. The economic evaluation investigates whether the drug acquisition costs of patients receiving glucosamine sulphate treatment are balanced by a lower incidence of total knee replacement and reduced hospitalization costs. METHODS: The study collected Belgian cost data and derived effectiveness data from a long-term follow-up of patients with knee osteoarthritis. Two randomised, placebo-controlled, double-blind trials compared patients who had received oral glucosamine sulphate 1500 mg once-a-day for up to 3 years with patients who had received placebo. Patients who had participated in these two trials and who had received at least one year of treatment were enrolled in a retrospective assessment of the incidence of total knee replacement during a five-year follow-up period. The price year was 2006. RESULTS: The sample consisted of 131 patients who had formerly received placebo and 144 patients who had formerly received glucosamine sulphate. The number of patients undergoing total knee replacement during the 5-year follow-up amounted to 19 patients (14.5%) in the former placebo group and 9 patients (6.3%) in the former glucosamine sulphate group. Health care costs per patient amounted to €1103 in the former placebo group and €901 in the former glucosamine sulphate group. CONCLUSIONS: Treatment of knee osteoarthritis with glucosamine sulphate for at least one year and up to three years was associated with a lower incidence of total knee replacement and lower health care costs over an observation period of eight years as compared with placebo.