Background: Patients with Graves’ disease treated with radioactive iodine report worse quality of life than those treated by thyroidectomy. However, radioactive iodine is often selected due to lower risk of complications and lower cost. The objective of this study was to estimate the cost-effectiveness of radioactive iodine versus total thyroidectomy for treatment of Graves’ disease. Methods: A Markov decision-analytic model was created to simulate clinical outcomes and costs of medication-refractory Graves’ disease treated with radioactive iodine or total thyroidectomy. Complication rates and utilities were derived from published data. Costs were extracted from national Medicare reimbursement rates. We conducted 1-way, 2-way, and probabilistic sensitivity analyses to identify factors that influence cost-effectiveness and reflect uncertainty in model parameters. The willingness-to-pay threshold was set at $100,000/quality-adjusted life-years. Results: Total thyroidectomy yielded 23.6 quality-adjusted life-years versus 20.9 quality-adjusted life-years for radioactive iodine. The incremental cost-effectiveness ratio was $2,982 per quality-adjusted life-years, indicating that surgery is highly cost-effective relative to radioactive iodine. Surgery was more cost effective than radioactive iodine in 88.2% of model simulations. Sensitivity analyses indicate that the model outcomes are driven predominantly by posttreatment quality of life, with contributing effects from rates of treatment complications and the impact of these complications on quality of life. Conclusion: For patients with Graves’ disease who either cannot tolerate or are refractory to antithyroid drugs, thyroidectomy is more cost-effective than radioactive iodine. Future research should validate reported differences in quality of life between these 2 treatment modalities.