OBJECTIVES Routine vaccination of elderly 60 years and older against Streptococcus pneumonia is not recommended in Sao Paulo. The state only offers the vaccine for institutionalized elderly or with underlying diseases. However, pneumococcal infections cause a substantial medical and economic burden, especially in elderly. The study aimed at assessing the potential health care and economic benefits of polysaccharide pneumococcal vaccination (PPV) in population over than 60 years old from a public payer perspective and from a societal perspective for Sao Paulo state METHODS A static decision tree model was used. Demographic and epidemiological data were obtained from Brazilian official sources or, when unavailable, from international literature. Economic data were obtained from a retrospective study performed in 2007 in a public and a private hospital. Results were presented as incremental cost-effectiveness ratio (ICER) in Reais (R$) per life year gained (LYG), assuming that vaccination protected for 5 years with 50-80% efficacy against bacteremic pneumococcal pneumonia (BPP) and no efficacy against non bacteremic pneumococcal pneumonia (NBPP). A probabilistic sensitivity analysis was performed, varying the efficacy against NBPP, the hospitalization costs of NBPP and BPP and the discount rate on costs and life years. RESULTS The mean effectiveness of PPV in the elderly Sao Paulo state population was 8707 LYG (95% CI: 8550–8864) in the base case. The vaccination program was found to be cost effective with a mean ICER of R$7733 per LYG (95% CI: 7568 to 7,899). When efficacy against NBPP increases from 0 to 50%, ratios decreased from R$7733 to R$2550 per LYG respectively, with a substantial diminution of ICER even when a small proportion of NBPP are prevented. From a societal perspective, PPV in elderly was found to be cost-savings. CONCLUSIONS This analysis suggests that pneumococcal vaccination can be considered for a more intensive utilization as a routine vaccination for elderly people.