Objective: A multicenter phase III randomized trial showed that six cycles of TAC (Taxotere® plus doxorubicin and cyclophosphamide) showed improved disease free survival (DFS) and overall survival (OS) over six cycles of FAC (fluorouracil plus doxorubicin and cyclophosphamide) for adjuvant chemotherapy of patients with operable node-positive unilateral breast cancer. The objective of the economic analysis was to determine the cost-effectiveness of TAC compared to FAC following primary surgery for breast cancer in women with operable, axillary-lymph-node-positive breast cancer from a Canadian provincial government payer perspective. Methods: The time horizon chosen for the model is a lifetime horizon. A Markov model was constructed looking at two time phases: first five years including treatment and long term follow-up. Clinical events included clinical response based on DFS and OS, as well as rates of febrile neutropenia, stomatitis, diarrhea and infections. Costs (2006 CAN$) were based on published sources and included chemotherapy drug acquisition costs, chemotherapy administration costs, relapse costs and follow-up costs, management of adverse events costs and costs for G-CSF prophylaxis. Health utilities were obtained from published sources and applied to each health state used in the model. A 5% discount rate was used on costs and outcomes. Results: The incremental cost per life year (LY) gained for TAC compared to FAC was $9,248/LY gained. The incremental cost per quality-adjusted life year (QALY) gained for TAC compared to FAC was $9,150/QALY gained. The model was robust to changes in input variables (e.g., febrile neutropenia rate, utility). When G-CSF and antibiotics were given prophylactically before every cycle, the incremental ratio changed to $15,538/LY gained and $15,374/QALY. Conclusion: TAC offers improved response at a higher cost than FAC. The cost effectiveness ratios are low, indicating good economic value in the adjuvant setting of node positive breast cancer patients.