The use of interferon alfa-2b (IFN-alpha 2b) as adjuvant therapy of high-risk resected cutaneous melanoma was recently found to significantly improve relapse-free and overall survival in the Eastern Cooperative Oncology Group trial 1684 (E1684). However, treatment toxicities and costs may limit its widespread use. A cost-effectiveness and cost-utility analysis of this therapy was conducted using a hypothetical cohort of patients as if they had entered E1684. Survival and recurrence rates were calculated at 7 and 35 years for typical 50-year-old melanoma patients based on the clinical results of E1684 and natural history databases. Costs included all treatment-related costs (i.e. drug acquisition and administration, monitoring and treatment-related toxicity) and the costs of treating recurrences. Estimated utility values were assigned based on data from other oncology trials. The model predicted that IFN-alpha 2b provided an extra 0.52 years of life compared with observation at 7 years; however, at 35 years, the survival benefit of IFN-alpha 2b increased almost 4-fold to nearly 2 years. At 7 years, the cost per year of life gained was U.S. $32,600 and the cost per quality-adjusted life-year (QALY) gained was U.S. $43,200. At 35 years, these costs decreased to U.S. $13,700 and $15,200, respectively. These costs are comparable with those of other well-established medical interventions. Although these results require confirmation in a prospective study, it appears that the use of high-dose IFN-alpha 2b for patients with high-risk melanoma is cost-effective.