OBJECTIVES: Diabetic macular edema (DME) is an ophthalmologic complication that develops in a subset of patients with diabetic retinopathy and that causes loss of functionality, reduced health-related quality of life, visual impairment, and if left untreated, blindness. A cost-effectiveness analysis was conducted to measure and compare the economic costs and clinical outcomes associated with ranibizumab monotherapy versus laser photocoagulation alone for the treatment of DME in Canada.  METHODS: Cost-effectiveness of ranibizumab to a Canadian healthcare system was analyzed using a Markov model based on data from the RESTORE clinical trial. After one year of treatment, the RESTORE trial reported a 6.1 (p<0.0001) letter improvement in best corrected visual acuity (BCVA) with ranibizumab compared to laser photocoagulation. The model included 8 health states as defined by BCVA, and followed a cohort of 63 year old patients with DME due to either type 1 or type 2 diabetes over a time horizon to a maximum of 20 years. Year 1 health state transitions and all health state utilities were derived from the RESTORE trial. From year 2 onwards, health state transitions were based on fixed probabilities of improving or worsening BCVA. Resource use and costs were collected from the RESTORE trial, published literature, or standard Canadian sources. RESULTS: Compared to laser photocoagulation, patients receiving ranibizumab monotherapy accrued an additional 1.44 years without legal blindness (BCVA >35 letters). Also, patients receiving ranibizumab accrued an additional 0.19 quality-adjusted life years (QALYs) with a total incremental cost of approximately $8,500, resulting in approximately $44,000 per QALY gained. CONCLUSIONS: Compared to laser photocoagulation, ranibizumab monotherapy shows cost-effectiveness within commonly accepted cost per QALY thresholds. In addition, this analysis predicts the use of ranibizumab for DME will result in more years without legal blindness.