Gastroesophageal reflux disease is a common problem. Most patients with erosive GERD require long-term treatment, without which relapse is common. The cost of ongoing medical care for GERD is substantial, and patients with symptomatic GERD have impaired quality of life. Treatment strategies for GERD should aim to improve patient outcome at a reasonable cost. Cost-effectiveness methodology facilitates the integration of costs and patient outcomes, enabling the clinician to choose the most cost-effective therapy in a variety of clinical circumstances. The published studies reviewed in this paper show that proton pump inhibitors are the most cost-effective initial and maintenance medical therapy for GERD under most circumstances. However, variations in drug acquisition costs, such as may occur in managed care practice settings, may lead to H2-receptor antagonists being preferred under some circumstances. In the long-term management of GERD, laparoscopic surgery is effective, but its high initial cost makes it less cost-effective than proton pump inhibitors in the early treatment years. Also, recent data suggest that the long-term morbidity is higher than previously suspected. Finally, appropriate application of cost-effectiveness analyses to clinical practice requires critical appraisal of model design and the perspective adopted. The purpose of this article is to describe the interpretation and application of the results of cost-effectiveness analyses in clinical practice, and to examine the published literature on the cost-effectiveness of treatment options for GERD.