OBJECTIVES: Irinotecan is an anti-cancer agent that is used for the treatment of metastatic colorectal cancer. Although it prolongs survival, it can cause severe toxicity (e.g. diarrhea and neutropenia) in patients who carry the UGT1A1*28 allele. This study evaluates the cost-effectiveness of UGT1A1 genotyping prior to irinotecan-based chemotherapy from the perspective of the German statutory health insurance. METHODS: We develop a decision-analytic Markov model to analyze costs and QALYs during a time horizon of six months (two-week cycles). No testing was compared to (1) change of chemotherapy to an irinotecan-free regimen, (2) dose reduction of irinotecan-based chemotherapy and (3) administration of a prophylactic G-CSF growth factor for patients with a UGT1A1*28 variant. Probability, utility and cost parameters used in this study were extracted from published literature. Uncertainty was assessed by deterministic and probabilistic sensitivity analyses. RESULTS: Strategy (2) was the cheapest strategy associated with costs of about €12,600 and effects of approx. 0.32 QALYs. All other three strategies were absolutely dominated. Compared to no testing, strategy (2) resulted in only marginal increases of QALYs (0.0003) but reduced costs by about €1,500 per patient. Strategy (1) resulted in smaller health gains (0.0002 QALYs) and smaller cost savings (about €60). Strategy (3) yielded approximately the same QALY gains as strategy (2) but at higher costs. In the probabilistic analysis, strategy (2) was the optimal strategy in 52% of simulations at a threshold of €50,000 per QALY. Uncertainty for this strategy originated primarily from the utility weights and the costs of chemotherapy. CONCLUSIONS: Our analysis suggests that UGT1A1 genotyping and subsequent reduction of irinotecan-based chemotherapy has a substantial cost-saving potential. Due to the promising results, further research, for example in the form of a managed entry agreement would be desirable to validate these findings.