OBJECTIVES:  To assess the cost-effectiveness of introducing CervarixTM (GlaxoSmithKline) prophylactic cervical cancer vaccine in Taiwan, when considering predicted changes to epidemiology given recent improvements in screening practices.METHODS:  A Markov model based on the natural history of HPV infection and cervical cancer was developed to simulate transitions between health states (normal, HPV infection, Cervical Intraepithelial Neoplasia (CIN) stages 1-3, cervical cancer stages 1-4, death) in the presence of screening. Using a lifetime simulation of 13-year old girls, the model was calibrated to Taiwan epidemiological endpoints: Scenario-1 predicting current cancer incidence and Scenario-2 a more realistic lower cancer incidence taking into account improvements in screening practices.  In the base-case, vaccination was assumed to reduce the probability of acquiring HPV-16/18 by 95%, HPV-31 by 53%, and HPV-45 infection by 88%; vaccine coverage was 100% with no waning. Sensitivity analysis was performed on costs, discount rates, vaccine efficacy, utility, waning, age at vaccination.RESULTS:  Vaccination was predicted to result in discounted cost-offsets in terms of screening outcomes, with savings over lifetime of a cohort of girls (n=151,550) of NT$22,906,933 (Scenario-1) and NT$23,790,511 (Scenario-2) for cytology, colposcopy, and biopsy combined. The total lifetime costs of treating CIN 2/3 lesions and cancer cases were decreased by NT$10,358,764 and NT$155,901,001 respectively (Scenario-1); NT$11,021,486, and NT$109,451,875 respectively (Scenario-2). The incremental cost per QALY was NT$451,992 (Scenario-1) and NT$640,986 (Scenario-2). Results were most sensitive to discount rates, waning of efficacy and age at vaccination. CONCLUSIONS:  When assessing the economic impact of cervical cancer vaccination, it is important to take into account the expected epidemiological changes as a result of changes to screening practices in Taiwan. Vaccination is predicted to result in substantial cost-offsets in screening outcomes and treatment costs. Vaccination with cervical screening is predicted to be cost-effective compared with screening alone.