OBJECTIVES: To identify published studies of the cost-effectiveness of cognitive-behavioural therapy (CBT) for the treatment of mental illness, and to review its health economic evidence base. METHODS: PubMed, Embase, Psych Info databases (1985-2005; English, French and Spanish) were searched to identify formal cost-effectiveness analyses of CBT using keywords: cognitive-behavioural therapy, interpersonal therapy, counseling, psychoanalysis, anxiety, obsessive-compulsive disorder, depression, depressive disorder, post-traumatic stress disorder, social phobia, bipolar disorder, personality disorder, eating disorder, psychosis, costs, cost analysis, cost-effectiveness, and economic. RESULTS: Of 531 abstracts reviewed, 13 cost-effectiveness studies were identified. CBT alone or in combination with medication, was shown to be cost-effective across countries (Australia=5; USA=5; UK=3), and patient populations (mood disorders=8; anxiety disorders=4; psychosis=1), regardless of study design or effectiveness outcome employed. Reported cost-effectiveness ratios (CERS) and incremental CERs were uniformly well below accepted thresholds. Generally, CBT added to usual care contributed little incremental cost due to offsets from reduced health care utilization. Limitations of these analyses include the omission of training and start-up expenditures, the exclusion of indirect costs (lost productivity), relatively short time horizons employed, and variability of response and remission rates. Despite compelling clinical and economic evidence, CBT remains underutilized. Barriers to more widespread use include restrictive mental health funding policy for non-pharmacological treatments, and lack of accredited CBT practitioners. CONCLUSION: Internationally, CBT represents good value for health dollars spent. Increased utilization of CBT for mental health disorders would improve clinical outcomes and could result in reduced health care expenditures. Further research to better understand long-term clinical and economic outcomes of CBT is warranted.