The treatment of hepatitis C has evolved over the past decade, and a combination of interferon (IFN), pegylated or standard type, and ribavirin is now acknowledged as the therapy of choice. Questions remain, however, about the duration of treatment and which patients are the most likely to benefit from therapy. Cost effectiveness analyses (CEAs) have been employed to answer these questions. Before the results can be interpreted appropriately, however, clinicians must make themselves aware of the underlying assumptions and the nature of the 'reference' case. Moreover, certain parameters, including quality-of-life evaluations, may not be easily translated from one jurisdiction to another. The costs and benefits of treatment are often very sensitive to such factors as patient age, viral load, histological severity and the viral genotype. Randomized controlled clinical trials, and the CEAs on which they are based, have shown that combination therapy is more cost effective than IFN monotherapy, and that both are cost effective compared with no treatment. Ongoing research on the use of pegylated IFN, weight-adjusted dosing of ribavirin, and the treatment of relapsers and nonresponders will provide valuable data that could be incorporated into future CEAs. Health care resources are vast, but not limitless. Therefore, health care providers need to become aware of how best to allocate resources to the general population. CEAs can facilitate this process by determining which treatment strategies are likely to yield the greatest clinical benefits without excessive expenditures.