BACKGROUND: Four types of treatment [hysterectomy, endometrial resection/ablation, levonorgestrel-releasing intrauterine system (LNG-IUS) and oral medical therapy] are available for management of menorrhagia. The objective of this study was to compare the cost and quality-adjusted life-years (QALYs) gained by these four treatment alternatives. METHODS: A Markov model was designed to simulate the healthcare resource utilization and QALYs of the four treatment alternatives for patients presenting with menorrhagia over 5 years. Clinical inputs were estimated from literature, and the cost analysis was conducted from the perspective of healthcare provider in Hong Kong. RESULTS: The base-case analysis showed that the hysterectomy group was the most effective (4.725 QALYs) alternative with the highest cost (USD6878, 1USD = 7.8HKD). The incremental cost per additional QALY (ICER) gained by hysterectomy was USD23 500. The probability of extra surgery in the endometrial resection/ablation was an influential factor. Probabalistic sensitivity analysis of 10 000 simulations of the Monte Carlo model showed that the hysterectomy group gained higher number of QALYs than the LNG-IUS, oral medical treatment and endometrial resection/ablation groups, 99, 99 and 98% of the time, and it was more costly than the other three groups over 85% of the time. CONCLUSIONS: Hysterectomy appears to be cost effective, with ICER less than USD50 000, for management of menorrhagia.