OBJECTIVES: With recent recognition of the primary role of Helicobacter pylori (HP) in peptic ulcer disease, it has been proposed that patients with dyspepsia undergo noninvasive testing for HP, instead of endoscopy, followed by antibiotics if positive. We evaluated cost-effectiveness of ‘Test&Treat’ strategy versus empirical treatment for HP infection in dyspeptic patients presenting in the primary care setting. METHODS: The study was a one-year incremental cost (yr2000 US dollars) per quality-adjusted life year (QALY) model for dyspeptic patients age less than 45 year-old in a primary care setting from a societal perspective. With ‘Test&Treat’ algorithm, patients were tested for HP infection using urea breath test. If positive, eradication was prescribed. Alternatively, patients were given conventional treatment of H2RA for four weeks. If not cured, HP would be eradicated “empirically’. Both direct and indirect costs were included. The model took into considerations of preventing gastric cancer from eradication. Sensitivity analyses were performed on prevalence of HP infection, drug treatment efficacy, laboratory test costs, drug treatment costs, and drug treatment utility loss. RESULTS: At baseline, with HP prevalence of 40% and HP antibiotic eradication efficacy of 89%, results showed that ‘Test&Treat’ had an incremental cost-effective ratio (ICER) of $31,723/QALY. One-way sensitivity analysis showed that antibiotic treatment efficacies lower than 45-46% would exceed the societal threshold ICER of $50,000. CONCLUSIONS: The model showed that ‘Test&Treat’ was cost-effective for uncomplicated dyspeptic patients in primary care. Although NIH guidelines state that all ulcer patients with HP infection require eradication regimen, universal endoscopic diagnosis of ulcer causation (HP+/HP-) would not be cost-effective. However, treating all patients empirically could increase antibiotic resistance. The ‘Test&Treat’ strategy has the benefits of slowing antibiotic resistance while avoiding high endoscopy costs. The model was robust to changes of most parameters--most sensitive to prevalence and eradication efficacy changes.