OBJECTIVES: To evaluate economic impact of linezolid (LZD) versus vancomycin (VAN) for treatment of confirmed methicillin-resistant Staphylococcus aureus(MRSA) nosocomial pneumonia (NP) in German healthcare system. METHODS:  A 4 week decision model was developed capturing 1st and 2ndline therapy. Published literature (primarily Wunderink 2012, reported 54.8% clinical efficacy for LZD vs. 44.9% for VAN in modified Intent-to-Treat population at End of Study for treatment of MRSA NP) and expert opinion provided clinical and resource use data, such as efficacy, mortality, adverse events (AEs), treatment duration, and length of hospital/ICU stay. German cost data was obtained from published literature. Base-case analysis used 10-day treatment duration. In event of treatment failure/severe AEs on 1st-line therapy, drug was switched after 7 days. Costs were reported in 2012 Euros. RESULTS: LZD was associated with minimally lower costs (€16,119 vs. €16,144), and greater overall treatment success compared to VAN, resulting in LZD ‘dominating’ VAN. About 80% of treatment costs were related to hospital stay, primarily ICU (72%). Drug therapy, physician visits, laboratory tests and AEs/treatment failure each account for ≤5% of total costs. Several scenarios were tested by varying treatment duration (7 or 14 days), and varying discontinuation/switch of therapy (at 5 or 10 days). In cases of shorter treatment duration (7 day) or delayed switch of therapy (at 10 day), linezolid continues to ‘dominate’. However, with 14 day treatment duration or early switch (at 5 day) linezolid becomes more costly, but still has greater effectiveness resulting in a relatively low Incremental Cost Effectiveness Ratio (ICER) of €8,207 and €2,343 per successfully treated patient. CONCLUSIONS: LZD is a cost-effective alternative to VAN for treatment of MRSA-confirmed NP, owing primarily to its higher clinical response rate. Future analyses should use other country costs/resource use data to test result generalizability and assess empiric treatment phase.