There has been a significant increase in use of hip arthroscopy for femoroacetabular impingement over the last 10 years. However, some care providers in the United Kingdom are not commissioning such an intervention due to cost constraints and lack of published cost effectiveness studies. A cost analysis for a prospective cohort of 58 patients undergoing hip arthroscopy for femoroacetabular impingement was performed. The short form 12 six dimension health utility score (SF12-6D) was used. This was recorded preoperatively and one year after surgery. Three time points (one, two, and 10 years) from operation were used to calculate the quality-adjusted-life-years (QALYs) gained. Predicted need for conversion to total hip replacement and diminishing gain with time (5% per year) was incorporated into the two- and 10-year models. The Scottish Tariff was used to assign the cost of surgery. The number of QALYs gained one year after surgery was 0.159, which equated to a cost per QALY of £19,335. This cost decreased to £10,118 per QALY gained at two years, and further still to £2,677 per QALY gained at 10 years. Multivariable regression analysis found that a worse preoperative SF12-6D was an independent predictor of greater QALYs gained one year after surgery (R² = 0.51, p<0.001). At no point in time, from one year onwards, does hip arthroscopy for femoroacetabular impingement cost more than £20,000 per QALY, making it a cost-effective intervention according to the National Institute for Health and Clinical Excellence.