Grid laser therapy has been demonstrated to be of benefit for the treatment of diabetic macular edema. The purpose of the present study was to determine the cost-effectiveness of grid laser therapy for the treatment of diabetic macular edema. The analysis was performed from the perspective of a third-party insurer. Decision analyses and cost-effectiveness analyses were performed by incorporating the data from the Early Treatment Diabetic Retinopathy Study, expected longevity data, and patient-based utilities. Various sensitivity analyses were performed to determine the robustness of the models. Laser treatment conferred an overall improvement in quality-of-life adjusted years of approximately 3 months over the duration of disease for a hypothetical patient. The unadjusted cost per quality-of-life adjusted year (QALY) was US$3,101. Net present value analysis demonstrated that the cost per QALY could increase to $3,655, assuming a 5% discount rate. Overall, grid laser photocoagulation for diabetic macular edema is a very cost-effective treatment based on the results of this cost-utility analysis.