OBJECTIVE: To assess the cost-effectiveness of highly active antiretroviral therapy (HAART) compared with two nucleoside reverse transcriptase inhibitors (NRTIs) for HIV infected individuals. DESIGN: Different data sources on the clinical effects and costs of treatments were combined using a Markov model. SETTING: English HIV treatment centres. Perspective UK public finance. INTERVENTIONS: HAART - dual NRTI therapy plus a protease inhibitor or a non-nucleoside reverse transcriptase inhibitor - vs. dual NRTI therapy. PARTICIPANTS: Hypothetical cohorts of 1000 individuals infected with HIV. Outcome measures Projected life expectancy, cost-effectiveness in UK pound per life-year saved and per quality-adjusted life-years (QALYs) saved. RESULTS: Assuming a 2-year additional treatment effect of therapy with HAART produced incremental cost-effectiveness ratios of pound14 602 per life-year saved and pound17 698 per QALY saved. CONCLUSIONS: The results were sensitive to a number of assumptions including the cost of HAART and the discount rate, but they suggest that the use of HAART in England is at least moderately cost-effective compared with treatment with two NRTIs alone.