OBJECTIVES: Back and leg pain arising from spinal stenosis with degenerative spondylolisthesis have a substantial impact on the quality of life of patients.  Using data on collected costs, resource utilization, and patient-reported outcomes from an ongoing randomized clinical trial comparing a novel, motion-preserving interlaminar stabilization device (coflex®) to control (instrumented posterolateral spinal fusion) among patients with spinal stenosis and spondylolisthesis, we report and compare the relative cost-effectiveness of these  two treatments.    METHODS: A model was developed to compare interventions.  The primary source for the model’s clinical input parameters was the recent investigational clinical trial of coflex®, supporting premarket approval application to FDA.  Treatment patterns over five years were estimated based on claims data analyses and expert opinion.  Oswestry Disability Index scores collected during the trial were converted to utilities.  A third-party payer perspective was used, and costs (US 2011$) and outcomes were discounted at 3% annually.  Both Medicare and private-payer costs were modeled.  Sensitivity analyses examined the influence of costs, utilities, and discount rates. RESULTS: Patients receiving coflex had higher success rates and lower costs in both the Medicare and private payer models.  Payments over five years were estimated at $14,534 for coflex® implant patients compared to $25,620 for controls (Medicare costs; $17,714 vs. $31,747 for private coverage).  Utilities were higher for coflex®-treated patients at all assessments, and totaled 3.03 quality-adjusted life years (QALY) compared to 2.98 for controls.  Incremental cost-effectiveness could not be calculated, as the novel implant dominated, demonstrating both lower costs and better outcomes.  Sensitivity analyses identified no scenario in which fusion was preferred over the coflex®. CONCLUSIONS: The use of coflex® to treat stenosis and spondylolisthesis is cost saving, and associated with improved patient outcomes.  Subgroup analyses comparing indications and patient characteristics should be conducted to confirm robustness of findings.