OBJECTIVES: Major depression affects 10 to 35% of community dwelling elderly and left untreated, is associated with increased healthcare expenditures and risk of non-suicide mortality. Pharmacotherapy treatment of depression in the elderly warrants special consideration due to pharmacokinetic changes and polypharmacy. The objective of this study was to estimate the incremental cost-utility of sertraline (Zoloft, Pfizer) compared to bupropion SR (Wellbutrin SR, GlaxoSmithKline) in a population of community dwelling elderly with a diagnosis of major depression. METHODS: Decision tree modeling was used to calculate the incremental cost-utility for a hypothetical cohort of 1000 elderly patients with diagnosed major depression over a time period of one-year from a societal perspective. Parameter estimates were obtained from a comprehensive review of published literature. Extensive sensitivity analysis was used to test each parameter. RESULTS: In the base-case analysis, bupropion SR treatment cost US$ 3.2 million and resulted in 777 quality-adjusted life years (QALYs), dominating sertraline treatment (US$3.5 million; 704 QALYs). One-way sensitive analysis yielded two sensitive utilities. Further examination of these utilities in a multi-way analysis revealed that if both utilities were tested at the high or low end of their ranges, they were no longer sensitive. CONCLUSIONS: Both drugs, given their low potential for drug-drug interactions, time-released formulations, and lack of anticholinergic side effects, are appropriate for use in the elderly and may improve overall quality of life. However, the results suggest that bupropion SR may be a more cost-effective choice of antidepressant pharmacotherapy in an elderly population, particularly in patients concerned about potential adverse sexual side effects.