We conducted a retrospective, non-randomized, cost-minimization study, from the perspective of the Ministry of Health, to compare the cost of managing cancer patients who required narcotic infusions, in hospital and at home. Our medical costs averaged $369.72 per inpatient day and $150.24 per outpatient day (saving $219.48 per diem, 1988 Canadian dollars), while narcotic costs were the same for any given patient in both settings. Sensitivity analysis showed that no reasonable changes in the quantity and cost of services reduced our savings by more than 50%. During incremental analysis, savings increased as more outpatient days were managed by our centre, from $0.00 for 318 days, to more than $500,000 for over 2000 days per annum. As this program has been extremely cost effective and preferred by our patients, other hospitals and central funding agencies might consider establishing a regional outpatient narcotic infusion program to reduce their costs.