Objective: Perform a cost-effectiveness analysis of the treatment of diabetic macular edema (DME) with ranibizumab plus prompt or deferred laser versus triamcinolone plus prompt laser. Data for the analysis were drawn from reports of the Diabetic Retinopathy Clinical Research Network (DRCRnet) Protocol I. Design: Computer simulation based on Protocol I data. Analyses were conducted from the payor perspective. Participants: Simulated participants assigned characteristics reflecting those seen in Protocol I. Methods: Markov models were constructed to replicate Protocol I's 104-week outcomes using a microsimulation approach to estimation. Baseline characteristics, visual acuity (VA), treatments, and complications were based on Protocol I data. Costs were identified by literature search. One-way sensitivity analysis was performed, and the results were validated against Protocol I data. Main Outcome Measures: Direct cost of care for 2 years, change in VA from baseline, and incremental cost-effectiveness ratio (ICER) measured as cost per additional letter gained from baseline (Early Treatment of Diabetic Retinopathy Study). Results: For sham plus laser (S+L), ranibizumab plus prompt laser (R+pL), ranibizumab plus deferred laser (R+dL), and triamcinolone plus laser (T+L), effectiveness through 104 weeks was predicted to be 3.46, 7.07, 8.63, and 2.40 letters correct, respectively. The ICER values in terms of dollars per VA letter were $393 (S+L vs. T+L), $5943 (R+pL vs. S+L), and $20 (R+dL vs. R+pL). For pseudophakics, the ICER value for comparison triamcinolone with laser versus ranibizumab with deferred laser was $14 690 per letter gained. No clinically relevant changes in model variables altered outcomes. Internal validation demonstrated good similarity to Protocol I treatment patterns. Conclusions: In treatment of phakic patients with DME, ranibizumab with deferred laser provided an additional 6 letters correct compared with triamcinolone with laser at an additional cost of $19 216 over 2 years. That would indicate that if the gain in VA seen at 2 years is maintained in subsequent years, then the treatment of phakic patients with DME using ranibizumab may meet accepted standards of cost-effectiveness. For pseudophakic patients, first-line treatment with triamcinolone seems to be the most cost-effective option. Financial Disclosure(s): Proprietary or commercial disclosure may be found after the references.