To compare the cost effectiveness of bone marrow transplantation and conventional chemotherapy, we evaluated the resources used in the care of adult patients with acute nonlymphocytic leukemia who were enrolled in a prospective trial and received induction chemotherapy at a single university hospital. Nineteen patients were subsequently treated with chemotherapy and 17 with transplantation. Cost accounting began with induction chemotherapy and extended over a five-year period. Costs were estimated by means of a resource-based, multivariate prediction model. The transplantation and chemotherapy groups had virtually equivalent use of resources (hospital days, laboratory tests, blood products, and radiologic and operative procedures) over five years, except for a 10-fold increase in the use of the intensive care unit for the patients who underwent transplantation (P less than 0.001). The total costs over five years were estimated at $193,000 per patient for transplantation and $136,000 per patient for chemotherapy (P = 0.02). At five years, the costs per year of life saved ("life-year") were nearly equal ($62,500 per life-year for transplantation vs. $64,000 per life-year for chemotherapy) because of the better rate of disease-free survival in patients who underwent bone marrow transplantation. We conclude that the cost effectiveness of bone marrow transplantation to treat acute nonlymphocytic leukemia compares favorably with that of chemotherapy and could be further enhanced if intensive care resources were used more selectively.