This paper demonstrates how economic modelling can be used to derive estimates of the cost-effectiveness of prognostic markers in the management of clinically localised and moderately graded prostate cancer. The model uses a Markov process and is populated using published evidence and local data. The robustness of the results has been tested using sensitivity analysis. Three treatment policies of 'monitoring' (observation), radical prostatectomy, or a selection-based management policy using DNA-ploidy as an experimental marker, have been evaluated. Modelling indicates that a policy of managing these tumours utilising experimental markers has an estimated cost per quality-adjusted life year (QALY) of pound 12 068. Sensitivity analysis shows the results to be relatively sensitive to quality-of-life variables. If novel and experimental markers can achieve specificity in excess of 80%, then a policy of radical surgery for those identified as being at high risk and conservative treatment for the remainder would be both better for patients and cost-effective. The analysis suggests that a radical prostatectomy treatment policy for the moderately graded tumours (Gleason grades -7) modelled in this paper may be inferior to a conservative approach in the absence of reliable prognostic markers, being both more costly and yielding fewer QALYs.