Home management is a very common approach to the treatment of illnesses such as malaria, acute respiratory infections, tuberculosis, diarrhoea and sexually transmitted infections, frequently through over-the-counter purchase of drugs from shops. Inappropriate drugs and doses are often obtained, but interventions to improve treatment quality are rare. An educational programme for general shopkeepers and communities in Kilifi District, rural Kenya was associated with major improvements in the use of over-the-counter anti-malarial drugs for childhood fevers. The two main components were workshop training for drug retailers and community information activities, with impact maintained through on-going refresher training, monitoring and community mobilization. This paper presents the cost and cost-effectiveness of the programme in terms of additional appropriately treated cases, evaluating both its measured cost-effectiveness in the first area of implementation (early implementation phase) and the estimated cost-effectiveness of the programme recommended for district-level implementation (recommended district programme). The proportion of shop-treated childhood fevers receiving an adequate amount of a recommended antimalarial rose from 2% to 15% in the early implementation phase, at an economic cost of 4.00 US dollars per additional appropriately treated case (2000 US dollars). If the same impact were achieved through the recommended district programme, the economic cost per additional appropriately treated case would be 0.84 US dollars, varying between 0.37 US dollars and 1.36 US dollars in the sensitivity analysis. As with most educational approaches, the programme carries a relatively high initial financial cost, of 11,477 US dollars (0.02 per capita US dollars) for the development phase and 81,450 US dollars (0.17 per capita US dollars) for the set up year, which would be particularly suitable for donor funding, while the annual costs of 18,129 US dollars (0.04 per capita US dollars) thereafter could be contained within the budget of a typical District. To reach the Abuja target of 60% of those suffering from malaria in sub-Saharan Africa having access to affordable and appropriate treatment within 24 hours, improvements in community-based malaria treatment are urgently required. From these results, policymakers can estimate costs for district-scale shopkeeper training programmes, and will be able to assess their relative cost-effectiveness as comparable evaluations become available from home management interventions in the future. Extrapolation of the results using a simple decision tree model to estimate the cost per DALY averted indicates that the intervention is likely to be considered highly cost-effective in comparison with standard benchmarks for interventions in low-income countries.