OBJECTIVES:  Atrial fibrillation (AF) is a chronic, progressive disease characterized by uncoordinated atrial activation involving a rapid and irregular heartbeat.  Its prevalence has been increasing worldwide.  Antiarrhythmic drug therapy is a commonly-used treatment for paroxysmal AF, and catheter ablation has become an important treatment alternative.  The purpose of this study was to assess the cost-effectiveness of catheter ablation compared to antiarrhythmic drug (AAD) therapy for the treatment of paroxysmal AF in Canada.  METHODS:  A simulation model was developed for a hypothetical cohort of 55-year-old patients with drug-refractory paroxysmal AF and a low stroke risk. The first year was modeled with a decision tree.  Years 2 and beyond were modeled with a Markov simulation.  The model treatment arms were catheter ablation and AAD mono-therapy.  The model was created to assess costs and quality-adjusted life-years over a lifetime horizon.  Clinical efficacy of catheter ablation and AAD therapy were modeled based on the results of a recently-published randomized controlled trial (Wilber et al., 2010).  Utilities and state transition probabilities were drawn from the published literature.  Costs were specific to Canada. RESULTS:  The incremental cost-effectiveness ratio for catheter ablation versus AAD therapy ranged from CAD$10,000 to a dominant strategy (cost less and is more effective) per quality-adjusted life-year.  Over a lifetime horizon, the quality-adjusted life expectancy ranged from 11.25 to 11.75 years for catheter ablation compared to 10.75 to 11.25 years for AAD therapy.  The results were robust in sensitivity analysis.  Results were most sensitive to ablation costs, probability of successful ablation treatment, and probability of revision to AF.  CONCLUSIONS: Catheter ablation appears to be cost-effective compared to AAD therapy among patients who had drug refractory paroxysmal AF in the Canadian population when using a cost-effectiveness threshold of CAD$50,000.  Further research is necessary to understand the effect of newly approved OAC therapies.