Recent randomized clinical trials (RCT) comparing anastrozole (Arimidex) and letrozole (Femara) to tamoxifen in the first-line treatment of postmenopausal women with advanced hormone-sensitive breast cancer have demonstrated that both agents were at least as effective as tamoxifen. In addition, one RCT has revealed significant superiority of letrozole to tamoxifen with regard to tumor response rate and time to progression. Based on the efficacy and toxicity data, anastrozole or letrozole may replace tamoxifen. A cost effectiveness analysis was undertaken to determine whether the new agents are economically acceptable alternatives to tamoxifen. In the absence of a randomized three-arm trial, a decision model was developed to simulate and compare the most common therapeutic outcomes. The clinical data were obtained from a meta analysis of modern (i.e., post-1990) randomized trials. Clinical outcomes data from the various trials were statistically pooled using a random effects model to provide point estimates and 95% confidence intervals. Total hospital resource consumption was collected from the charts of 87 patients with advanced disease who had failed tamoxifen therapy. The model suggested a comparable duration of quality-adjusted progression-free survival between letrozole and anastrozole, both being superior to tamoxifen (179 days vs. 172 days vs. 161 days). Letrozole and anastrozole had overall costs of Can2,883 dollars and 2,847 dollars per patient, respectively, which were marginally higher than tamoxifen at Can2,258 dollars per patient. When the costs and benefits were combined, the data generated an incremental cost per quality-adjusted progression-free year of 12,500 dollars and 19,600 dollars for letrozole and anastrozole, respectively, relative to tamoxifen. Letrozole and anastrozole are both economically acceptable alternatives to tamoxifen in the first-line treatment setting. However, when efficacy and cost effectiveness are considered together, letrozole could be preferentially considered.