OBJECTIVE To evaluate the cost effectiveness of laparoscopy for unexplained infertility. METHODS We performed a cost-effectiveness analysis using a computer-generated decision analysis tree. Data used to construct the mathematical model were extracted from the literature or obtained from our practice. We compared outcomes following four treatment strategies: [1] no treatment, [2] standard infertility treatment algorithm (SITA), [3] laparoscopy with expectant management (LSC/EM), and [4] laparoscopy with infertility therapy (LSC/IT). The incremental cost-effectiveness ratio (ICER) was calculated, and one-way sensitivity analyses assessed the impact of varying base-case estimates. METHODS Academic in vitro fertilization practice. METHODS Computer-simulated patients assigned to one of four treatments. METHODS Fertility treatment or laparoscopy. METHODS Incremental cost-effectiveness ratios. RESULTS Using base-case assumptions, LSC/EM was preferred (ICER =$128,400 per live-birth in U.S. dollars). Changing the following did not alter results: rates and costs of multiple gestations, penalty for high-order multiples, infertility treatment costs, and endometriosis prevalence. Outcomes were most affected by patient dropout from infertility treatments-SITA was preferred when dropout was less than 9% per cycle. Less important factors included surgical costs, acceptability of twins, and the effects of untreated endometriosis on fecundity. CONCLUSIONS Laparoscopy is cost effective in the initial management of young women with infertility, particularly when infertility treatment dropout rates exceed 9% per cycle.