There are a number of effective but highly toxic drugs that exhibit a narrow therapeutic index and marked interpatient pharmacokinetic variability. Individualized therapy with such drugs requires therapeutic drug monitoring (TDM) to obtain the desired clinical effects safely. Cost-effectiveness analysis in health care is still at an early stage of development, especially for TDM. A systematic review was carried out to document studies that have addressed the cost-effectiveness of TDM. The Cochrane database and Medline were searched. References identified by this approach were then searched manually for relevant articles. Very few studies have been performed that document the cost-effectiveness of TDM, and TDM has been demonstrated to be cost-effective only for aminoglycosides. For the other classes of drugs that are monitored, the rationale for TDM has been supported, but appropriate cost-effectiveness analyses have not been performed. Because the use of many of these drugs without TDM would increase the risk of under- or overdosing, emphasis should not be placed solely on cost-effectiveness but rather on how such interventions can be applied in the most cost-effective and clinically useful manner.