Objectives. To examine the costs and benefits associated with long-term etanercept (ETN) treatment in patients with severe ankylosing spondylitis (AS) in the UK in accordance with the BSR guidelines. Methods. A mathematical model was constructed to estimate the costs and benefits associated with ETN plus non-steroidal antiinflammatory drugs (NSAIDs) compared with NSAIDs alone. Individual patient data from Phase III RCTs was used to inform the proportion and magnitude of initial response to treatment and changes in health-related quality of life. A retrospective costing exercise on patients attending a UK secondary care rheumatology unit was used to inform disease costs. Published evidence on long-term disease progression was extrapolated over a 25-yr horizon. Uncertainty was examined using probabilistic sensitivity analyses. Results. Over a 25-yr horizon, ETN plus NSAIDs gave 1.58 more QALYs at an additional cost of 35978 pound when compared with NSAID treatment alone. This equates to a central estimate of 22 pound 700 per QALY. The incremental cost per QALYs using shorter time periods were 27 pound 600, 23 pound 600 and 1222 600 at 2, 5 and 15 yrs, respectively. Using a 25-yr horizon, 93% of results from the probabilistic analyses fall below a threshold of 25 pound 000 per QALY. Conclusions. This study demonstrates the potential cost-effectiveness of ETN plus NSAIDs compared with NSAIDs alone in patients with severe AS treated according to the BSR guidelines in the UK.