OBJECTIVE: To assess the long-term cost-effectiveness of extracorporeal membrane oxygenation (ECMO) for mature newborn infants with severe respiratory failure. METHODS: A prospective economic evaluation was conducted alongside a pragmatic randomized, controlled trial in which 185 infants were randomly allocated to ECMO (n = 93) or conventional management (n = 92) and then followed up to 7 years of age. Information about their use of health services during the follow-up period was combined with unit costs (pound sterling, 2002-2003 prices) to obtain a net cost per child. The cost-effectiveness of neonatal ECMO was expressed in terms of incremental cost per additional life year gained and incremental cost per additional disability-free life year gained. The nonparametric bootstrap method was used to present cost-effectiveness acceptability curves and net benefit statistics at alternative willingness-to-pay thresholds held by decision-makers for an additional life year and for an additional disability-free life year. RESULTS: Over 7 years, neonatal ECMO was effective at reducing known death or severe disability. Mean health service costs during the first 7 years of life were 30,270 pound sterling in the ECMO group and 10,229 pound sterling in the conventional management group, generating a mean cost difference of 20,041 pound sterling that was statistically significant. The incremental cost per life year gained was estimated at 13,385 pound sterling. The incremental cost per disability-free life year gained was estimated at 23,566 pound sterling. At the notional willingness-to-pay threshold of 30,000 pound sterling for an additional life year, the probability that neonatal ECMO is cost-effective at 7 years was estimated at 0.98. This translated into a mean net benefit of 24,362 pound sterling for each adoption of neonatal ECMO rather than conventional management. CONCLUSIONS: This study provides rigorous evidence of the cost-effectiveness of neonatal ECMO during childhood.