Objective: Prophylactic therapy with palivizumab, a humanized monoclonal antibody, reduces the number of respiratory syncytial virus (RSV)-related hospitalizations in preterm infants, including those in the 32 to 35 weeks gestational age (GA) subgroup. The cost-effectiveness of this therapy in Canada is unknown. To evaluate the cost-effectiveness of palivizumab as respiratory syncytial virus prophylaxis in premature infants born at 32 to 35 weeks GA, from both the payer (base-case) and societal perspectives. Methods: A decision analytic model was designed to compare costs and benefits of prophylaxis in this subgroup of premature infants. Sensitivity analyses were performed to ascertain the robustness of the model by varying mortality, health utilities, discount rates and administration costs. SETTING: Canadian publicly funded health care system (base-case analysis). PARTICIPANTS: Canadian infants born at 32 to 35 weeks gestation without chronic lung disease. INTERVENTIONS: Palivizumab prophylaxis versus no prophylaxis. MAIN OUTCOME MEASURES: Expected costs and incremental cost-effectiveness ratio expressed as cost per quality-adjusted life-year (QALY) gained using $CAN 2006. Results: The expected costs were higher for palivizumab prophylaxis as compared with no prophylaxis. The incremental cost-effectiveness ratio for the base-case scenario was $16,605 per QALY after discounting, which is considered cost-effective. Sensitivity analyses showed the model was robust through reasonable estimates of key variables. Sub-analyses that varied risk of RSV based on the validated, Canadian risk scoring model were sensitive to the resulting variation in RSV-related hospitalization rates. In instances where risk was low, palivizumab was not cost-effective. However, for infants with at least moderate risk (2 or more risk factors), palivizumab had incremental costs per QALY that indicated moderate to strong evidence for adoption (range: $1,598 to $30,819 per QALY). Conclusion: Palivizumab was cost-effective and our model supports prophylaxis for infants born at 32 to 35 weeks GA, particularly those with moderate risk of RSV.