BACKGROUND: Untreated post-traumatic stress disorder (PTSD) in children and adolescents is associated with a considerable economic burden on the health system, families and society. Recent research has demonstrated the potential efficacy of cognitive therapy as an early intervention for PTSD in children and adolescents. Children who experienced a single traumatic event in the previous two to six months and were randomized to cognitive therapy for PTSD (CT-PTSD) were significantly more likely to be PTSD-free compared to those randomized to usual care represented by waitlist control. The current study evaluated the economic impact of improvements in the treatment of PTSD in children and adolescents. METHODS: A cost-effectiveness analysis was conducted from the national health service/personal social services perspective with outcomes expressed as quality-adjusted life years (QALYs). Patient level costs and outcomes were collected during the 11 week clinical trial and extrapolated to a three year time horizon using economic modelling methods. Uncertainty was estimated using probabilistic sensitivity analysis and assumptions were tested using one way sensitivity analysis. RESULTS: The incremental cost-effectiveness ratio at 3 years was £2,205 per QALY with a 60%-69% probability of CT-PTSD being cost-effective compared to usual care at the UK £20,000 to £30,000 per QALY decision threshold. CONCLUSIONS: This study provides preliminary evidence for the cost-effectiveness of cognitive therapy in this treatment population. Larger pragmatic trials with longer follow-up are indicated.