Objective: Smoking, a leading cause of morbidity and mortality in the US, results in approximately 440,000 deaths, economic costs of $96.8 billion, and losses of more than 5.6 million years of potential life each year. The aim of this study was to compare the costs and effectiveness of the new drug varenicline against the existing therapy buproprion SR. Methods: A decision analytic model was developed using DATA Treeage software to compare the cost-effectiveness of varenicline with buproprion SR. The costs and probabilities of success were reported for 12 weeks for 1 mg varenicline and 150 mg buproprion SR. The drug acquisition costs were obtained from the Drug Topics Red Book and published clinical trials. The model also included costs and effectiveness values for placebo. Costs for physician visits and counseling were obtained from clinical trials and other published sources. The probabilities of success were reported as the continuous abstinence rate (CAR) in all the studies. Treatment effects were compared using head-to-head clinical trials. Incremental cost effectiveness ratios (ICERs) were calculated for additional cost/CAR and were estimated relative to placebo. One- way sensitivity analysis was performed to determine the robustness of the results. Results: The ICER for varenicline compared to placebo was $3688/CAR, and the ICER for buproprion SR compared to placebo was $5915/CAR. The total costs of varenicline and buproprion SR were $1696.2 and $1833.6 respectively. Varenicline was found to be more effective than buproprion SR and placebo with a CAR of 0.46, compared to CARs of 0.31 and 0.17 respectively. Sensitivity analysis indicated that the results were affected by the model assumptions for cost and effectiveness treatment options. Conclusion: Based on the results from the decision analytic model, smoking cessation therapy with varenicline should result in lower costs, and higher CARs as compared to buproprion SR.