OBJECTIVES: Kidney transplantation (KT) is generally acknowledged as the most clinically effective and cost-effective option in managing ESRD patients. The objective of our study was to identify costs and estimate cost-effectiveness of various ESRD treatment modalities in Latvia. METHODS: We retrospectively analysed files of 250 patients in an in-center hemodialysis treatment mode (HD), 60 patients in continuous ambulatory peritoneal dialysis treatment mode (CAPD) and 51 patients after successful KT for the first 3 years of treatment. All direct medical costs were registered. Cost-effectiveness was estimated by costs per 3 life-years gained. RESULTS: Mean direct costs (in 2003 €) for one patient for the first year and all three years of treatment were: for CAPD 16,250.0+1,577.4€ and 48,327.7±1,162.2€ respectively, for HD 14,131.7±1,212.4€ and 42,052.4±1,203.2€ respectively, and for KT 15,880.0 ± 4,744.7€ and 25,460.0±2,994.4€ respectively. Average treatment costs per patient over the 3 years were the highest in the CAPD group (P <0.05 vs HD, P <0.001 vs KT) and KT was the least expensive (as expected). The initial higher costs of KT were fully recouped within 15 months after surgery. Probability of life expectancy for CAPD, HD and KT for the first and third year were: 77.3%, 84.1% and 91.3% respectively, and 45.0%, 43.l% and 83.7% (P <0.001 vs CAPD and HD), respectively. The cost of 3 life-years gained by KT was significantly less (P <0.001) than the cost associated with CAPD and HD (29598.5€ vs 106,661.1€ and 97,798.5€ respectively). CONCLUSIONS: Compared to CAPD and HD, KT provided greater survival benefits to patients with ESRD, at a lesser cost. It may be more cost-effective to manage patients starting on RRT with preemptive KT or HD, than CAPD.