OBJECTIVES: HIV and AIDS is a major cause of premature death and impose a large disease burden in Kenya. Antiretroviral treatment (ART) is one of the interventions being implemented to mitigate these impacts. Economic studies on the cost and health effects of ART are very scarce in developing countries, Kenya included. The objectives of this research were to estimate healthcare utilization, the unit costs of services and the cost per life year (LYs) gained of HIV treatment interventions from a provider's perspective. METHODS: A retrospective study of adults on ART and those not on ART, had CD4 counts 250 and below at enrolment. Data was collected from Mbagathi District Hospital (Mbagathi) (n=350) and Moi Teaching and Referral Hospital (Moi) in Kenya (n=400). A micro-costing method was used to cost all the treatment inputs and Markov modelling estimated the cost-effectiveness analysis, lifetime costs and health benefits of HIV treatments in the two hospitals. RESULTS: The undiscounted lifetime costs for No-ART in Mbagathi and Moi were, KSh169,123 ($2,260) and KSh184,415 ($2,464) respectively, while life years gained for both hospitals was 2.68 years. The undiscounted lifetime costs for the ART group in Mbagathi and Moi were KSh932,071 ($1,245) and KSh1,608,496 ($21,490) respectively while lifetime benefits were 15.85 and 25.56 years for Mbagathi and Moi respectively. At 10% discounting rate, the lifetime benefits for No ART for both hospitals was 2.1 years and costs were KSh153,807 ($2,055) and KSh166,377 ($2,223) for Mbagathi and Moi respectively while the lifetime cost for ART was KSh423,959 ($5,664) and KSh563,647 ($7,530) for Mbagathi and Moi respectively, and the discounted life time effects were to 7.73 years and 6.52 years respectively. CONCLUSIONS: ART treatment was the most cost effective treatment method and although patients on treatment follow up in Moi lived longer, Mbagathi Hospital was most cost effective intervention.