OBJECTIVES: To quantify the financial effects of the introduction of a recommendation for rotavirus vaccination in Saxony, Germany, in 2008 using a retrospective data analysis. Special emphasis is given to the herd effect. METHODS: We analyzed the costs of rotavirus infection between 2007 and 2010 based on 360.000 observations from the AOK Plus of children under 5 years for Saxony. To investigate the cost impact of the regional recommendation, we compared the associated costs of the expected annual RVGE cases derived from 2005 when rotavirus vaccination was not yet available, with the actual annual number of RVGE cases, vaccinations and associated costs per age cohort. A decrease in RVGE cases in not vaccinated cohorts was attributed to herd effect. We make distinction between in- and outpatient cases, societal and SHI perspective as well as different age groups. RESULTS: Given that the vaccination rate has increased from 5% to 61% in the observed period, we obtained following estimates: the mean total cost reduction per year attributable to introducing a recommendation for rotavirus vaccination is 4.5 million € (2.4 million €) from the societal (SHI) perspective. The mean cost savings of vaccination per avoided case rise from 572 € (291 €) in 2007 to 718 € (375 €) in 2010. The overall share of outpatient costs is about 72% (60%). About 45% of the total savings is attributable to herd effect. The herd effect per avoided case decreases over time while immunity increases. CONCLUSIONS: A recommendation for rotavirus vaccination in Saxony turns out to be cost saving from the SHI as well as the societal perspective. This is mainly attributed to the herd effect being present when having high vaccination rates.