Teledermatology offers a means of providing specialist care to underserved patients. The objectives of this study were to compare the costs of interactive teledermatology with conventional care, and to evaluate from a healthcare provider perspective whether interactive teledermatology is economically viable in the northeastern region of the United States. We studied the interactive teledermatology practice at Nantucket Cottage Hospital on Nantucket Island and the ambulatory clinics at the Massachusetts General Hospital in Boston, Massachusetts. The cost-minimization analysis compared the costs of an interactive teledermatology practice with that of a face-to-face dermatology clinic. One-way sensitivity analyses examined the effect of varying the costs of technology, physician compensation, or clinic space on the overall cost of interactive teledermatology. We also assessed the economic viability of the interactive teledermatology practice by comparing the operating costs with reimbursements. The total hourly operating costs for the interactive teledermatology practice on Nantucket Island and the face-to-face clinic in Boston were $274 and $346, respectively. Three separate one-way sensitivity analyses showed that, for the cost of the teledermatology practice to equal that of the conventional clinic, the cost of teledermatology technology could increase by 9.3-fold, dermatologists working at the teledermatology practice could be compensated up to $197 an hour, or the cost of teledermatology clinic space could reach $57 an hour. Our analysis also showed that the hourly reimbursement for the teledermatology practice was $487, which exceeded its hourly operating cost of $274. The cost of operating an interactive teledermatology practice in a remote region may be less than that of a conventional clinic in a nearby urban center in the northeastern area of the United States. From a healthcare provider perspective, interactive teledermatology can be an economically viable means of providing dermatological care to remote regions.