OBJECTIVES: Peginterferon alfa-2b (12KD)/ribavirin (PEG2b) has been shown to produce a higher rate of sustained virological response (SVR) than non-pegylated combination therapy (non-PEG) in CHC, but the cost effectiveness of this improved efficacy has not been assessed in Brazil. METHODS: We developed a Markov model to describe the clinical history of CHC in which the cohorts of hepatitis C virus (HCV) patients received PEG2B or non-PEG for either 48 or 24 weeks according to genotype and liver histology and were followed for their expected lifetime. The reference patient was a 30-year-old male with CHC without cirrhosis. The SVRs to PEG2B and non-PEG were 48% and 34% for HCV genotype 1 and 88% and 80% for non-1, respectively. Quality of life for each health state was based on literature. Costs for each health state were based on three Delphi panels, one with hepatologists, one with intensivists and another with oncologists. Costs in 2004 reais and benefits were discounted at 3%. RESULTS: In HCV genotype 1, PEG2B increases life expectancy (LY) by 1.79 years and quality adjusted life expectancy (QALY) by 0.82 years compared to non-PEG. The incremental cost per QALY gained is 21.074 reais. In HCV non-1 genotype patients, PEG2B increases LY by 1.02 and QALY by 0.47 years in comparison to non-PEG. The incremental cost per QALY gained is 15.057 reais. The weighted average incremental cost-effectiveness ratio, using population-based HCV genotype distribution estimates, for all genotypes was 17.832 per QALY. CONCLUSIONS: Peginterferon alfa-2b (12 KD)/ribavirin is a cost-effective therapy for treatment of naive adults with CHC compared with standard interferon alfa-2b/ribavirin, regardless of HCV genotype.