OBJECTIVES: Linezolid, the first available oxazolidinone, has shown efficacy in the treatment of methicillin-resistant Staphylococcus aureus (MRSA) infections, including nosocomial pneumonia. In patients with MRSA nosocomial pneumonia, survival rate was higher for those treated with linezolid than patients treated with vancomycin (80% versus 63.5%). Moreover, clinical cure rate was superior for linezolid (59% vs 35.5%) (Chest 2003;124:1789-97). We analyzed the economic impact of these clinical outcomes in an Argentinean setting using a decision-analytic model. METHODS: A decision-analytic model was developed to estimate the costs and consequences of using linezolid versus vancomycin in hospitalized patients with nosocomial pneumonia in an Argentinean setting. Clinical and other parameters were taken from published trials. Three Argentinean infectologists provided data on resource utilization. For costing purposes (tests, hospitalization, adverse events and drugs) ALFABETA and IECS unit costs database were used (both are published). Outcomes consisted of total costs per patient, cost per death avoided, cost per life-year gained, and cost per cure. RESULTS: According to the model results, an additional 14.3% of patients treated with linezolid versus vancomycin were cured (69.6% versus 55.4%). Average total treatment cost was $14,268 for linezolid-treated patients versus $13,065 for vancomycin-treated patients, with an incremental ratio of $8,429 per additional patient cured. Death rates were 20.4% for linezolid versus 35% for vancomycin, with an average 2.49 life-years gained per linezolid patient in a 65-year-old cohort (13.7 versus 11.2 years). The incremental cost per death avoided and per life year gained were $7299 and $482, respectively. To evaluate the robustness of findings sensitivity analyses were carried out modifying the value of several key variables. As a result of changing them suitably, the overall conclusions remained the same. CONCLUSION: From the Argentinean perspective, linezolid is cost-effective versus vancomycin in the treatment of nosocomial pneumonia due to suspected MRSA.