Background: The REDUCE trial examined whether chemoprevention with the dual 5-alpha reductase inhibitor, dutasteride, reduced risk of prostate cancer (PCa) detection on biopsy. Objective: We examined the cost effectiveness of dutasteride compared with placebo in preventing PCa in men at increased risk as seen in REDUCE, from a US payer perspective. Methods: A Markov model was developed to compare costs and outcomes of chemoprevention with dutasteride 0.5mg/day or placebo with usual care in men aged 50-75 years, with serum prostate-specific antigen (PSA) of 2.5-10 ng/mL (men aged <60 years) or 3.0-10 ng/mL (men aged ≥60 years), and with a single negative prostate biopsy in the prior 6 months. The model simulated the REDUCE cohort annually through different health states over 4-, 10-year and lifetime time horizons. Risks of PCa for men receiving placebo and dutasteride were obtained from REDUCE. Rates of acute urinary retention events and benign prostate hyperplasia-related surgeries also came from REDUCE. Costs and utilities were obtained from published literature. All costs are reported in $US, year 2009 values. Results: The model indicated that, over 10 years, dutasteride patients would experience fewer PCas (251 vs 312 per 1000 patients) at increased cost ($US15 341 vs $US12 316) than placebo patients. Although life-years were not substantially affected, the model calculated an increase in QALYs of 0.14 for dutasteride patients. Chemoprevention with dutasteride appeared to be cost effective, with an incremental cost per QALY of $US21 781 and cost per PCa avoided of $US50 254. The 4-year and lifetime incremental costs per QALY were $US18 409 and $US22 498, respectively.