OBJECTIVES:  To determine the cost-effectiveness of adjustable gastric banding (AGB), Roux-En-Y gastric bypass (RYGB) and sleeve gastrectomy (SG) versus usual care (UC) from the perspective of the Australian public healthcare system. METHODS:  A Markov model was constructed to simulate the costs and outcomes for four approaches to managing obesity. The base-case was a 30-year-old Australian female with a body mass index (BMI) > 35. Subgroup analysis was conducted to account for the effect of diabetes as well as various differences in cohort characteristics. Uncertainty was characterised by one-way and probabilistic sensitivity analyses. RESULTS:  All bariatric surgeries were effective. The incremental cost-effectiveness ratios were similar at $24,454 for AGB, $22,645 for RYGB and $27,523 for SG compared to UC. At a willingness to pay threshold of $70,000 per quality-adjusted life year (QALY), the probabilities of being cost-effective were 64%, 75% and 71% for AGB, RYGB and SG, respectively. Subgroup analysis showed that bariatric procedures are less cost-effective for older cohorts. For those with diabetes, all the procedures were dominant in comparison to UC. CONCLUSIONS:  This model shows that all bariatric procedures are a cost-effective treatment for the management of obese patients. When given to a subgroup with diabetes, bariatric interventions become cost-saving.