OBJECTIVES: Streptococcus pneumonia is associated with two invasive diseases (meningitis and bacteremia) and non-invasive disease (pneumococcal pneumonia), which has caused high morbidity and mortality in infants and the elderly in Taiwan. A cost-effectiveness analysis of pneumococcal conjugate vaccine (PCV 10) in Taiwan was conducted using transmission-dynamic model. METHODS: As static pharmacoeconomic model fails to account for vaccination-induced herd-immunity, we developed an age-structured multi-compartment dynamic model to estimate both economic and clinical impact of universal PCV10 vaccination over 10-year time horizon under health care system’s perspective in Taiwan. Model parameters such as economic and clinical burden of pneumococcal diseases in Taiwanese population, vaccine efficacy, utilities and demographic parameters were captured by retrospective population-based National Health Insurance Reimbursement Database (NHIRD), published sources, unpublished data, and assumptions made in consultation with clinical experts. Univariate sensitivity analyses were conducted to test the robustness of model parameters.  RESULTS: Assuming a four-dose schedule and 90% of vaccination coverage for both vaccines, universal infant vaccination with PCV10 would prevent 133 cases of IPD, 122,476 cases of pneumococcal pneumonia and 3,857 deaths, an equivalent of 93,393 life years and leads to a net medical cost savings of NT$ 6,047.4 million, compared to no vaccination. At the current proposed price of NT$2,700 for PCV10, the incremental cost-effectiveness ratio (ICER) is expected to be cost-effective with NT$106,362 (US$3,324) per life year gained. The program’s cost-effectiveness results are highly sensitive to the vaccine price and number of doses while not sensitive to uncertainty in disease incidence and costs of treatment.  CONCLUSIONS: Universal pediatric PCV10 vaccination in Taiwan is estimated to have considerable impact on reducing the burden of pneumococcal diseases and expected to be cost-effective in payer’s perspective compared to no vaccination.