OBJECTIVES: MDS is an incurable and rare hematological disease that affects the production of blood cells. Two hypomethylating agents for the treatment of MDS are available in Brazil:  azacitidine  (AZA) and decitabine (DEC). Our aim was to compare the costs and outcomes of azacitidine (75 mg/m2 per day x 7 days every 4 weeks) vs. decitabine (45 mg/m2 per day x 3 days every 6 weeks) from the perspective of SUS. METHODS: We developed a Markov model to determine the cost-effectiveness (CE) and 3-year budget impact of introducing AZA in the Brazilian market. Patients considered were classified with IPSS Int 1, Int 2 and High risk. The model considered progression to acute myelogenous leukemia (AML) and death as the major outcomes of treatment. Outcomes, costs and epidemiological data were obtained from a systematic review of literature and public sources. The costs of adverse events and progressive disease were also included. A sensitivity analysis was performed to test the robustness of the results. The currency conversion used was BR$ 1.8: US$1.0 RESULTS: The cost effectiveness analysis showed better results for AZA compared to DEC resulting in lower costs and improved outcomes in terms of mortality rates and progression to AML. Over a 3-year time period, the use of AZA was associated with a savings of BR$85,000 (US$45,000) compared to  DEC. Assuming that AZA would be given to 50% of patients with MDS in Brazil, it would have a budgetary impact of BR$45,000 000 (US$25,000,000) for the public health care system SUS. CONCLUSIONS: When compared to DEC, AZA showed improved outcomes and lower costs as a treatment option for MDS in the Brazilian public health system.