INTRODUCTION: Apligraf™ is a full thickness manufactured living skin equivalent indicated for the treatment of venous leg ulcers (VLU). OBJECTIVE: To undertake a model-based retrospective cost-effectiveness analysis (CEA), from a societal and health care perspective, of the outpatient treatment of VLU with the 4-layer high-compression bandage system with and without one application of Apligraf™. METHOD: Because no prospective head-to-head study of this comparison had yet been undertaken, a computer-based model was developed. The model represented the clinical consequences of the two approaches (ulcers healed, time to heal, ulcer recurrence, infections, complications) and the costs associated with these consequences over two analytic horizons, 3 months and 6 months. Data for the 3-month model was estimated based on two published studies and clinical experience by a panel of seven physicians from across Canada. The panel used an interactive modified Delphi approach culminating in a facilitated group meeting. Data for the 6-month model was extrapolated from the shorter model using several different plausible assumptions. RESULTS: Over 3 months the use of Apligraf™ increased costs by $304 and $316 from the societal and the health care perspectives respectively, provided clinical benefits of 22 ulcer days averted (UDA), and a C/E ratio of $14/UDA for each perspective. Over 6 months the C/E ratio is below $5/UDA for the societal and health care perspectives. Sensitivity analysis indicated that the model was relatively robust. Subgroup analyses suggested that Apligraf™ is particularly cost-effective in patients with long standing ulcers. CONCLUSION: The model suggest that Apligraf™ is cost-effective in treating VLU, particularly when longer analytic horizons are considered. Confirmation of this finding in a prospective study is encouraged.