OBJECTIVES: Streptococcus pneumoniae is a frequent cause of bacterial meningitis, septicaemia, pneumonia and acute otitis media. These diseases lead to substantial mortality, morbidity and costs. There is 7-valent pneumococcal conjugate vaccine (PCV-7) developed, that has proved to be highly effective against invasive disease, but has also provided significant protection against pneumonia and acute otitis media. The objective of this study was to evaluate the projected health benefits, costs and cost- effectiveness of vaccination with the 7- valent conjugated pneumococcal vaccine compared with no vaccination, in all infants in Sweden. METHODS: An economic model (Markov model) was used in order to perform a cost-utility and a cost- effectiveness analysis, comparing a universal pneumococcal vaccination program with a no-vaccination program. The main outcomes were measured by reduction in the disease burden, costs and net costs of vaccination (per individual and a whole birth cohort), incremental cost per Quality adjusted life years (QALY) and life year (LY) gained. RESULTS: The results of the current health economic analysis indicate that a universal pneumococcal vaccination program in Sweden could prevent a considerable number of pneumococcal infections- mainly acute otitis media infections- and reduce the related morbidity and mortality. The incremental cost per QALY and LY gained was estimated to range between SEK250,000 and SEK500,000. In case herd immunity was included, the ICER was estimated to range between 100,000 and 150,000 per QALY and LY gained. CONCLUSION: The incremental cost per QALY gained advocates that the health benefits of vaccination in Sweden can be achieved within generally accepted levels of cost per QALY. The sensitivity analyses indicate that this conclusion is robust to reasonable changes in the assumptions upon which the analysis was based.