OBJECTIVES: The Health Information Technology for Economic and Clinical Health Act is driving electronic health record (EHR) adoption while requiring demonstration of meaningful use. Implementation of computerized provider order entry (CPOE) is integral in meeting meaningful use criteria, and has been shown to improve medication safety and reduce costs in the inpatient setting. However, the cost-effectiveness (CE) of CPOE in ambulatory settings remains uncertain. This study estimates the CE of CPOE in reducing medication errors and adverse drug events (ADEs) in the ambulatory setting. METHODS: We created a decision-analytic model to estimate the cost-effectiveness of CPOE at a large, multidisciplinary medical group over five years. We adopted the medical group’s perspective and conducted our base case analysis using administrative and system costs (2010), changes in efficiency, monetary incentives for CPOE adoption, and changes in number of medication errors and ADEs following CPOE implementation. We evaluated a scenario that accounted for added office time for prescribers and staff to resolve medication errors and treat ADEs, and a scenario that incorporated revenue changes realized by the medical group, which owns four, on-site, retail pharmacies.   We used one-way and probabilistic sensitivity analyses to evaluate uncertainty of the model inputs. RESULTS: CPOE dominated paper prescribing, costing $20 million less than paper and resulting in 1.5 million and 15.5 thousand fewer medication errors and ADEs, respectively. The model was robust to uncertainty in all inputs, and CPOE remained dominant in ≥ 99.3% of the simulations in the base case and scenario analyses. The largest drivers of uncertainty in the model were the number of chart pulls, the number of specialty providers and their hourly salaries. CONCLUSIONS: Our findings suggest that provider groups adopting CPOE and eliminating paper prescribing have the potential to improve medication safety and reduce healthcare costs in the context of meaningful use.