OBJECTIVES: The objective of the study was to evaluate the economic impact of adding the use of chlorhexidine gluconate (CHG) impregnated sponge dressings to Canadian hospitals’ standard infection prevention routine. The current standard of care for catheter insertion in Canada involves hand hygiene, skin preparation and transparent film dressings. The aim of this study was to determine whether the addition of CHG impregnated sponge dressings to catheter insertion procedure was cost-effective. METHODS: The economic model was populated with clinical and economic data obtained from peer-reviewed literature along with case-costing data from a large Canadian hospital network. One and two way sensitivity analyses were conducted on economic and clinical parameters to ensure robustness. RESULTS: Based on model calculations using a hypothetical hospital with 400 in-patient beds and 20 intensive care unit beds, the use of CHG dressings would reduce the number of CLABSIs from 107 to 43 annually, and would reduce the number of local site infections from 430 to 258 annually.  The model demonstrates cost savings through the reduction of CLABSI and local site infections as well as through decreased nursing costs. The model establishes that the use of CHG dressings has the potential to provide $869, 867.49 of net cost savings in one hospital per year. CONCLUSIONS: The use of chlorhexidine gluconate impregnated sponge dressings for central venous and arterial catheter insertion sites proves to be a cost-effective intervention in Canadian hospitals.