Objective: To evaluate the economic implications for transplant centres, Medicare and society of treatment of corticosteroid-resistant Banff Grades I, II and III acute kidney transplant rejection with the antithymocyte globulins Thymoglobulin® or Atgam®. Design and setting: This was a cost analysis of a randomised double-blind multicentre clinical trial comparing the safety and efficacy of Thymoglobulin® and Atgam® that was performed at 25 centres in the US in 1994 to 1996. Patients and participants: The study enrolled 163 patients, 82 in the Thymoglobulin® arm and 81 in the Atgam® arm. Methods: Estimates of the cost of care from the initiation of rejection therapy to 90 days post-therapy were derived from various publicly available sources and applied to patient-specific clinical events documented in the clinical trial. Patients received either intravenous Thymoglobulin® (1.5 mg/kg/day) for an average of 10 days or intravenous Atgam® (15 mg/kg/day) for an average of 9.7 days. Results: On average, Thymoglobulin® provided significant cost savings compared with Atgam® from the perspective of society [$US5977 (1996 values); 95% confidence interval (CI) $US3719 to $US8254], Medicare ($US4967; 95% CI $US3256 to $US6678) and the transplant centre ($US3087; 95% CI $US1512 to $US4667). The overall advantage attributable to Thymoglobulin® was primarily due to savings from fewer recurrent rejection treatments and less frequent return to dialysis. Conclusions: Treatment of acute renal transplant rejection with Thymoglobulin® is a cost saving strategy when compared with treatment with Atgam®.