OBJECTIVES: Chronic Obstructive Pulmonary Disease (COPD) is a rising concern in high population areas, such as Mexico City, where the prevalence is estimated at around 8%. The objective of this study was to examine if the recently available treatment for COPD, indacaterol, was more cost-effective than the therapeutic alternatives already available. METHODS: A cost-effectiveness analysis was performed from an institutional perspective (Mexican Institute of Social Security, IMSS). The comparators used were salmeterol and tiotropium, both alternatives available within the National Formulary and recommended by the National Treatment Guidelines for COPD. Effectiveness data was taken from published literature; the effectiveness parameter used was Forced Expiratory Volume in 1 second (FEV1); dosage regimens compared were indacaterol 300 µg vs. tiotropium 18 µg, and indacaterol 150 µg vs. salmeterol 50 µg. Resource use data was obtained from the institution; total direct costs of physician consults, lab and image tests, hospitalization and emergency room visits, and treatments were considered. The source of the unit costs was the institution, current for 2010. All costs are expressed in local currency (Mexican Pesos, MXP). The time horizon was less than 1 year; no discount rate was used. The analytical tool used to build the model was a decision tree. A probabilistic sensitivity analysis was performed through a Monte Carlo simulation with 100,000 iterations to confirm the robustness of the model. RESULTS: The results show a cost-effectiveness ratio of $13 MXP per mL of FEV1 increased for indacaterol, compared to $13.7 MXP for tiotropium. Likewise, a cost-effectiveness ratio of $12.9 MXP per mL of FEV1 increased for indacaterol, compared to $14.3 MXP for salmeterol, confirmed that indacaterol is a more cost-effective alternative (dominant) for the treatment of COPD. CONCLUSIONS: From an institutional perspective in Mexico, indacaterol is a more cost-effective (dominant) alternative than either tiotropium or salmeterol for the treatment of COPD.