We compared the cost-effectiveness of a methicillin-resistant Staphylococcus aureus (MRSA) programme of active surveillance plus decolonization with the current Veterans Health Administration (VHA) strategy of active surveillance alone, as well as a common strategy of no surveillance. A decision-analytical model was developed for an inpatient stay time horizon, using the VHA's perspective. Model inputs were taken from published literature where available, and supplemented with expert opinion when necessary. Effectiveness outcomes were hospital-acquired MRSA infections and deaths avoided. One-way and two-way sensitivity analyses and Monte Carlo simulations were performed. In the base-case analysis, the strategy of active surveillance plus decolonization dominated (i.e. lower cost and greater effectiveness) both the comparison strategies of active surveillance and no surveillance. In addition, the active surveillance strategy dominated the strategy of no surveillance. One-way and two-way sensitivity analyses demonstrated that at low levels of direct benefit of decolonization (1-4%), the strategy of active surveillance plus decolonization would no longer be dominant. In the probabilistic sensitivity analysis, active surveillance plus decolonization dominated both the other two strategies, and the active surveillance strategy dominated no surveillance in all of 1000 Monte Carlo simulations. These results provide a strong economic argument for adding an MRSA decolonization protocol to the current VHA active surveillance strategy.