OBJECTIVE To create a national policy model to evaluate the projected cost-effectiveness of multiple hospital-based strategies to prevent methicillin-resistant Staphylococcus aureus (MRSA) transmission and infection. DESIGN Cost-effectiveness analysis using a Markov microsimulation model that simulates the natural history of MRSA acquisition and infection. PATIENTS AND SETTING Hypothetical cohort of 10,000 adult patients admitted to a US intensive care unit. METHODS We compared 7 strategies to standard precautions using a hospital perspective: (1) active surveillance cultures; (2) active surveillance cultures plus selective decolonization; (3) universal contact precautions (UCP); (4) universal chlorhexidine gluconate baths; (5) universal decolonization; (6) UCP + chlorhexidine gluconate baths; and (7) UCP+decolonization. For each strategy, both efficacy and compliance were considered. Outcomes of interest were: (1) MRSA colonization averted; (2) MRSA infection averted; (3) incremental cost per colonization averted; (4) incremental cost per infection averted. RESULTS A total of 1989 cases of colonization and 544 MRSA invasive infections occurred under standard precautions per 10,000 patients. Universal decolonization was the least expensive strategy and was more effective compared with all strategies except UCP+decolonization and UCP+chlorhexidine gluconate. UCP+decolonization was more effective than universal decolonization but would cost $2469 per colonization averted and $9007 per infection averted. If MRSA colonization prevalence decreases from 12% to 5%, active surveillance cultures plus selective decolonization becomes the least expensive strategy. CONCLUSIONS Universal decolonization is cost-saving, preventing 44% of cases of MRSA colonization and 45% of cases of MRSA infection. Our model provides useful guidance for decision makers choosing between multiple available hospital-based strategies to prevent MRSA transmission.