The epidemiology of herpes zoster and post-herpetic neuralgia (PHN) was quantified from a variety of data sources and the potential cost-effectiveness of vaccination assessed. The annual incidence and severity of zoster increases sharply with age, as measured by physician consultation and hospitalisation rates, average length of stay, average proportion of cases developing PHN and the age-specific case-fatality ratio. Combining these data with information on health related quality of life results in an estimated loss of 20000 quality adjusted life years (QALYs) annually in England and Wales from herpes zoster (17400 due to PHN). The current cost of treating herpes zoster associated disease is estimated to be 47.6m pounds annually. Since both the health and economic burden are high, vaccination of the elderly is expected to be cost-effective under most scenarios, the attractiveness of immunisation increasing with age due to the increased burden of disease in the very elderly.