To determine the cost-effectiveness of Lumbar Total Disc Replacement (LTDR) with circumferential spinal fusion surgery. Cost utility analysis. We prospectively reviewed a cohort of 32 consecutive patients who underwent LTDR between 2004 and 2008 with a mean follow-up for 3.75 years. Identical data was compared to a similar group of patients (n=37) who underwent fusion in our institution. Oswestry Disability Index, visual analogue scale, quality of life (SF-36) and NHS resource use. Cost-effectiveness was measured by the incremental cost per quality-adjusted life year (QALY) gained. QALY gains were estimated from SF-36 data using standard algorithms. There was no significant intergroup difference in the ODI, VAS and SF-36 pre and post-op. Both treatments produced statistically significant and equivalent improvements in mean health state utility at the 24-month follow-up (0.078 for LTDR, 0.087 for fusion). Costs were significantly lower with LTDR than with fusion due to a shorter mean procedure time (193.6 vs 377.4 minutes) and shorter length of stay (5.8 vs 7 days). The mean cost difference was £2,878 per patient. At 2 years, the cost per QALY gain of the lower-cost option (LTDR) was £48,892 although the cost effectiveness ratio would fall to below £30,000 if it is assumed that the patient benefits of LTDR last for at least 4 years. Both treatments led to significant improvements in patient outcomes which were sustained for at least 24 months. Costs were lower with LTDR which is effective and a more cost-effective alternative.