In a prospective three centre study oesophageal transection and gastric devascularisation have been compared with endoscopic sclerotherapy in the long term management of bleeding oesophageal varices. Cirrhotic patients (Child's A or B grade) with documented bleeding oesophageal varices were treated initially with emergency sclerotherapy, and after five days stability, were allocated to one of the two treatment regimes. The endoscopic sclerotherapy group underwent regular sclerotherapy until variceal obliteration while those undergoing surgery were not endoscoped unless bleeding recurred, when they were treated by sclerotherapy if appropriate. Ninety two patients were eligible for analysis (68% alcoholic cirrhosis; mean age 50.1 years) and follow up was achieved for a mean of 52.5 months (range 17-83). Mortality in the first three months was greater in the oesophageal transection and gastric devascularisation group (20% v 1%) but by two years the survival curves were the same and thereafter there was no difference in mortality. Rebleeding occurred in 13/41 (31%) patients, undergoing oesophageal transection and gastric devascularisation. The costs incurred during the first year of oesophageal transection and gastric devascularisation treatment were significantly greater than with endoscopic sclerotherapy (4369 pounds v 1067 pounds, p < 0.0001) and the high rate of rebleeding in the surgical group meant that no cost savings occurred in subsequent years. It is concluded that oesophageal transection and gastric devascularisation confers no benefit over endoscopic sclerotherapy in terms of long term survival and that it is not cost effective as judged by the current health care costs in the United Kingdom.