The objective of this study was to conduct a cost-benefit analysis to compare the costs of developing and delivering an effective school-based smoking prevention program with the savings to be expected from reducing the prevalence of smoking in the Canadian population over time. A smoking prevention program that meets published criteria for effectiveness, implemented nationally in Canada, would cost $67 per student (1996 dollars). Assuming such a program would reduce smoking by 6% initially and 4% indefinitely, lifetime savings on health care would be $3,400 per person and on productivity, almost $14,000. The benefit-cost ratio would be 15.4 and the net savings $619 million annually. Sensitivity analyses reveal that considerable economic benefits could accrue from an effective smoking prevention program under a wide range of conditions.