OBJECTIVES: Current treatments for non-melanoma skin cancer (NMSC) can be problematic when lesions are in cosmetically sensitive sites. Patients may also be unsuitable for standard therapies for other reasons. Cosmetic procedures are therefore common. Methyl aminolevulinate (Metvix) photodynamic therapy (MAL PDT) has comparable lesion response rates and superior cosmetic outcomes in such patients. The aim of this study was to estimate the mean total costs of treatment to the UK health care system for methyl aminolevulinate (MAL) PDT compared with a set of current treatment options. METHODS: A decision-analytic approach was adopted in which treatment pathways were defined for both MAL PDT and the current treatment options. The model follows patients presenting with basal cell carcinoma (BCC) or actinic keratosis (AK) through up to three lines of treatment, accounting for the associated health care costs. Epidemiological and GP referral/treatment parameters were determined from a survey of GPs. Treatment modality and reconstructive surgery parameters were determined from a survey of UK specialists familiar with the treatment of NMSC. Further model parameters were determined from an extensive literature review of the clinical data. RESULTS: The surveys indicated that simple lesion excision is currently the favoured treatment modality for difficult-to-treat BCC. For patients with difficult-to-treat AK, 5-fluorouracil is currently the favoured treatment. In addition, the surveys showed that a large number of patients undergoing lesion excision require costly reconstructive surgery. The decision-analytic model found MAL PDT had higher initial costs, but had cost-offsets due to reduced requirement for reconstructive surgery. CONCLUSIONS: Higher initial costs associated with MAL PDT are offset by savings from reduced reconstructive surgery. Improved cosmetic outcome and reduced need for surgery are also likely to impact on patients' treatment preferences and on quality of life.