BACKGROUND: Improving access to parasitological diagnosis of malaria is a central strategy for control and elimination of the disease. Malaria rapid diagnostic tests (RDTs) are relatively easy to perform and could be used in primary level clinics to increase coverage of diagnostics and improve treatment of malaria. METHODS: A cost-effectiveness analysis was undertaken of RDT-based diagnosis in public health sector facilities in Afghanistan comparing the societal and health sector costs of RDTs versus microscopy and RDTs versus clinical diagnosis in low and moderate transmission areas. The effect measure was 'appropriate treatment for malaria' defined using a reference diagnosis. Effects were obtained from a recent trial of RDTs in 22 public health centres with cost data collected directly from health centres and from patients enrolled in the trial. Decision models were used to compare the cost of RDT diagnosis versus the current diagnostic method in use at the clinic per appropriately treated case (incremental cost-effectiveness ratio, ICER). RESULTS: RDT diagnosis of Plasmodium vivax and Plasmodium falciparum malaria in patients with uncomplicated febrile illness had higher effectiveness and lower cost compared to microscopy and was cost-effective across the moderate and low transmission settings. RDTs remained cost-effective when microscopy was used for other clinical purposes. In the low transmission setting, RDTs were much more effective than clinical diagnosis (65.2% (212/325) vs 12.5% (40/321)) but at an additional cost (ICER) of US$4.5 per appropriately treated patient including a health sector cost (ICER) of US$2.5 and household cost of US$2.0. Sensitivity analysis, which varied drug costs, indicated that RDTs would remain cost-effective if artemisinin combination therapy was used for treating both P. vivax and P. falciparum. Cost-effectiveness of microscopy relative to RDT is further reduced if the former is used exclusively for malaria diagnosis. In the health service setting of Afghanistan, RDTs are a cost-effective intervention compared to microscopy. CONCLUSIONS: RDTs remain cost-effective across a range of drug costs and if microscopy is used for a range of diagnostic services. RDTs have significant advantages over clinical diagnosis with minor increases in the cost of service provision. TRIAL REGISTRATION: The trial was registered at ClinicalTrials.gov under identifier NCT00935688.