BACKGROUND Antibiotic-impregnated bone cement is infrequently used in the United States for primary total hip arthroplasty because of concerns about cost, performance, and the possible development of antibiotic resistance and because it has been approved only for use in revision arthroplasty after infection. The purpose of this study was to model the use of antibiotic-impregnated bone cement in primary total hip arthroplasty for the treatment of osteoarthritis to determine whether use of the cement is cost-effective when compared with the use of cement without antibiotics. METHODS To evaluate the cost-effectiveness of each strategy, we used a Markov decision model to tabulate costs and quality-adjusted life years (QALYs) accumulated by each patient. Rates of revision due to infection and aseptic loosening were estimated from data in the Norwegian Arthroplasty Register and were used to determine the probability of undergoing a revision arthroplasty because of either infection or aseptic loosening. The primary outcome measure was either all revisions or revision due to infection. Perioperative mortality rates, utilities, and disutilities were estimated from data in the arthroplasty literature. Costs for primary arthroplasty were estimated from data on in-hospital resource use in the literature. The additional cost of using antibiotic-impregnated bone cement ($600) was then added to the average cost of the initial procedure ($21,654). RESULTS When all revisions were considered to be the primary outcome measure, the use of antibiotic-impregnated bone cement was found to result in a decrease in overall cost of $200 per patient. When revision due to infection was considered to be the primary outcome measure, the use of the cement was found to have an incremental cost-effectiveness ratio of $37,355 per QALY compared with cement without antibiotics; this cost-effectiveness compares favorably with that of accepted medical procedures. When only revision due to infection was considered, it was found that the additional cost of the antibiotic-impregnated bone cement would need to exceed $650 or the average patient age would need to be greater than seventy-one years before its cost would exceed $50,000 per QALY gained. CONCLUSIONS When revision due to either infection or aseptic loosening is considered to be the primary outcome, the use of antibiotic-impregnated bone cement results in an overall cost decrease. When only revision due to infection is considered, the model is strongly influenced by the cost of the cement and the average age of the patients. With few patients less than seventy years of age undergoing total hip arthroplasty with cement in the United States, the use of antibiotic-impregnated bone cement in primary total hip arthroplasty may be of limited value unless its cost is substantially reduced.