Background: Opioid overdose is a leading cause of accidental death in the United States. Objective: To estimate the cost-effectiveness of distributing naloxone, an opioid antagonist, to heroin users for use at witnessed overdoses. Design: Integrated Markov and decision analytic model using deterministic and probabilistic analyses and incorporating recurrent overdoses and a secondary analysis assuming heroin users are a net cost to society. Data Sources: Published literature calibrated to epidemiologic data. Target Population: Hypothetical 21-year-old novice U. S. heroin user and more experienced users with scenario analyses. Time Horizon: Lifetime. Perspective: Societal. Intervention: Naloxone distribution for lay administration. Outcome Measures: Overdose deaths prevented and incremental cost-effectiveness ratio (ICER). Results of Base-Case Analysis: In the probabilistic analysis, 6% of overdose deaths were prevented with naloxone distribution; 1 death was prevented for every 227 naloxone kits distributed (95% CI, 71 to 716). Naloxone distribution increased costs by $53 (CI, $3 to $156) and quality-adjusted life-years by 0.119 (CI, 0.017 to 0.378) for an ICER of $438 (CI, $48 to $1706). Results of Sensitivity Analysis: Naloxone distribution was cost-effective in all deterministic and probabilistic sensitivity and scenario analyses, and it was cost-saving if it resulted in fewer overdoses or emergency medical service activations. In a "worst-case scenario" where overdose was rarely witnessed and naloxone was rarely used, minimally effective, and expensive, the ICER was $14 000. If national drug-related expenditures were applied to heroin users, the ICER was $2429. Limitation: Limited sources of controlled data resulted in wide CIs. Conclusion: Naloxone distribution to heroin users is likely to reduce overdose deaths and is cost-effective, even under markedly conservative assumptions. Primary Funding Source: National Institute of Allergy and Infectious Diseases. Ann Intern Med. 2013;158:1-9.