BACKGROUND: Most HIV prevention for female sex workers (FSWs) focuses on individual behaviour change involving peer educators, condom promotion and the provision of sexual health services. However, there is a growing recognition of the need to address broader societal, contextual and structural factors contributing to FSW risk behaviour. We assess the cost-effectiveness of adding community mobilisation (CM) and empowerment interventions (eg. community mobilisation, community involvement in programme management and services, violence reduction, and addressing legal policies and police practices), to core HIV prevention services delivered as part of Avahan in two districts (Bellary and Belgaum) of Karnataka state, Southern India. METHODS: An ingredients approach was used to estimate economic costs in US$ 2011 from an HIV programme perspective of CM and empowerment interventions over a seven year period (2004-2011). Incremental impact, in terms of HIV infections averted, was estimated using a two-stage process. An 'exposure analysis' explored whether exposure to CM was associated with FSW's empowerment, risk behaviours and HIV/STI prevalence. Pathway analyses were then used to estimate the extent to which behaviour change may be attributable to CM and to inform a dynamic HIV transmission model. FINDINGS: The incremental costs of CM and empowerment were US$ 307,711 in Belgaum and US$ 592,903 in Bellary over seven years (2004-2011). Over a 7-year period (2004-2011) the mean (standard deviation, sd.) number of HIV infections averted through CM and empowerment is estimated to be 1257 (308) in Belgaum and 2775 (1260) in Bellary. This translates in a mean (sd.) incremental cost per disability adjusted life year (DALY) averted of US$ 14.12 (3.68) in Belgaum and US$ 13.48 (6.80) for Bellary--well below the World Health Organisation recommended willingness to pay threshold for India. When savings from ART are taken into account, investments in CM and empowerment are cost saving. CONCLUSIONS: Our findings suggest that CM and empowerment is, at worst, highly cost-effective and, at best, a cost-saving investment from an HIV programme perspective. CM and empowerment interventions should therefore be considered as core components of HIV prevention programmes for FSWs.