Infusions of intravenous gamma-globulin (IVGG) are an effective, nontoxic therapy for chronic idiopathic thrombocytopenic purpura (ITP) that would be more widely accepted if the therapeutic agent were not so expensive. The costs and outcomes of managing such children with splenectomy and IVGG were modeled with Markov processes. Children unresponsive to one treatment were considered to have received the alternative. The model accounted for spontaneous remissions, therapeutic responses, traumatic events, episodes of sepsis, and operative deaths. For a 10-year-old child with chronic ITP, the strategy of initial treatment with splenectomy had associated costs of $17,000 and a 97.9% ten-year survival rate, whereas the strategy of initial treatment with IVGG had associated costs of $21,000 but a 98.6% survival rate. Each additional life saved by employing the IVGG strategy cost $540,000, or $8,000 per year for a life expectancy of 70 years. Sensitivity analyses demonstrated that for older children the IVGG strategy continued to result in improved survival rates but was more costly than the splenectomy strategy. For younger children, the IVGG strategy dominated, with improved survival rates and lower costs.