OBJECTIVES: The US Oncology Adjuvant Trial 9735 has demonstrated an overall survival (OS) benefit over 7 years for docetaxel plus cyclophosphamide (TC) compared with doxorubicin plus cyclophosphamide (AC) as adjuvant treatment for women with operable stage I-III invasive breast cancer. However, the cost of the TC regimen is much higher than AC. The objective of this analysis was to evaluate the cost-effectiveness of TC vs. AC from the perspective of the US payers. METHODS: A lifetime decision model with 3% discount rate was developed to estimate incremental cost (IC) per life-year (LY) gained and IC per quality-adjusted life-year (QALY) gained. The OS benefit of TC compared with AC over the 7-year trial period was extrapolated to lifetime using life expectancy of age-matched women in the general US population. Chemotherapy drug costs were calculated using standard dosage schedule combined with the US average sale price + 6%. Cost associated with chemotherapy administration, and treatments per episode of recurrence and adverse events were estimated from retrospective analyses using US claims databases. Parameter uncertainties were assessed using one-way sensitivity analyses. RESULTS: The projected per person LYs and QALYs gained for TC compared with AC were 0.850 and 0.674, respectively. The estimated IC per person was $5325. The IC per LY and QALY gained per person were $6261 and $7905, respectively. The results were robust across a wide range of sensitivity analyses; in particular, the IC per LY and QALY gained remained under $50,000 when the duration of the analysis was limited to 7 years. CONCLUSIONS: This analysis shows that use of the TC regimen compared to the standard AC regimen in patients with operable stage I-III breast cancer is a cost-effective treatment strategy.