OBJECTIVES: Although tamoxifen shows benefit in the first five years of adjuvant therapy, extending its use by an additional five years is not beneficial. This has created an unmet medical need for patients who are disease free after 5 years of standard adjuvant therapy, but still have a significant risk of relapse over the following ten years. In a large randomized placebo-controlled trial, letrozole significantly reduced the risk of recurrence by 42% and the risk of distant metastases by 39%. The DFS was significantly improved with letrozole regardless of nodal status. METHODS: A Markov model was developed to evaluate the lifetime cost-utility of extended adjuvant letrozole in postmenopausal women. The cost-utility analysis was based on the results of the MA17 trial, from which patient-level data was used to estimate event rates in both treatment groups. Expected costs, life-years and QALYs were estimated by summing across all health states and cycles for each treatment group. Deterministic and probabilistic sensitivity analyses were performed to account for uncertainty. RESULTS: The baseline results from the model show ICERs of $30,100/LY and $34,058/QALY for a cohort of 1,000 postmenopausal women. Letrozole is even more cost-effective in the node positive patient sub-group than for the aggregate patient group, with an incremental cost per life-year of $23,235 and an incremental cost per QALY of $26,553. For node negative patients the model shows ICERs of $41,357 per life-year and an incremental cost per QALY of $46,049. The sensitivity analyses show narrow ranges for the credible intervals, and for a threshold of $50,000/QALY the likelihood that letrozole would be cost-effective is 1.0 in node positive patients, while being 0.77 in node negative patients. CONCLUSION: Our model shows that letrozole is cost-effective in both node negative and node positive patients with ICERs far below the generally accepted threshold of $50,000/QALY.