Oral capecitabine (Xeloda) is an effective drug with favourable safety in adjuvant and metastatic colorectal cancer. Oxaliplatin-based therapy is becoming standard for Dukes' C colon cancer in patients suitable for combination therapy, but is not yet approved by the UK National Institute for Health and Clinical Excellence (NICE) in the adjuvant setting. Adjuvant capecitabine is at least as effective as 5-fluorouracil/leucovorin (5-FU/LV), with significant superiority in relapse-free survival and a trend towards improved disease-free and overall survival. We assessed the cost-effectiveness of adjuvant capecitabine from payer (UK National Health Service (NHS)) and societal perspectives. We used clinical trial data and published sources to estimate incremental direct and societal costs and gains in quality-adjusted life months (QALMs). Acquisition costs were higher for capecitabine than 5-FU/LV, but higher 5-FU/LV administration costs resulted in 57% lower chemotherapy costs for capecitabine. Capecitabine vs 5-FU/LV-associated adverse events required fewer medications and hospitalisations (cost savings pound3653). Societal costs, including patient travel/time costs, were reduced by >75% with capecitabine vs 5-FU/LV (cost savings pound1318), with lifetime gain in QALMs of 9 months. Medical resource utilisation is significantly decreased with capecitabine vs 5-FU/LV, with cost savings to the NHS and society. Capecitabine is also projected to increase life expectancy vs 5-FU/LV. Cost savings and better outcomes make capecitabine a preferred adjuvant therapy for Dukes' C colon cancer. This pharmacoeconomic analysis strongly supports replacing 5-FU/LV with capecitabine in the adjuvant treatment of colon cancer in the UK.