OBJECTIVE Patients with atypical cytology and equivocal or negative cystoscopy pose a challenge due to uncertainty about the presence of cancer. We determined the cost-effectiveness of using fluorescence in situ hybridization assays to determine the need for biopsy in patients with atypical cytology and equivocal or negative cystoscopy. METHODS Data from 2 large prospective studies evaluating the usefulness of fluorescence in situ hybridization in the setting of atypical cytology to detect urothelial carcinoma were combined. The data were used to calculate sensitivity and specificity for the UroVysion fluorescence in situ hybridization assay in various clinical scenarios. Cost data were obtained from our institution and Medicare reimbursement rates. Evaluations with or without bladder biopsy and with or without upper tract evaluation were considered. RESULTS The study included 263 patients with atypical cytology and equivocal (62) or negative (201) cystoscopy. In patients with equivocal cystoscopy (assuming biopsy was performed in the operating room) biopsy based on fluorescence in situ hybridization results saved $1,740 per patient ($3,267 vs $1,527 per patient) and avoided 42 biopsies compared to biopsy in all patients. If office based biopsies were used then cost savings using fluorescence in situ hybridization results were $95 per patient. Among patients with negative cystoscopy biopsy based on fluorescence in situ hybridization resulted in costs savings of $2,241 per patient, avoiding 167 biopsies, compared to biopsy in all patients. Assuming office based biopsy, the cost savings were $216 per patient. CONCLUSIONS The decision to perform biopsy based on fluorescence in situ hybridization assay in patients with atypical cytology and equivocal or negative cystoscopy was associated with a significant decrease in bladder cancer associated costs.