BACKGROUND: In developing countries rotavirus is the leading cause of severe diarrhoea and diarrhoeal deaths in children under 5. Vaccination could greatly alleviate that burden, but in Mexico as in most low- and middle-income countries the decision to add rotavirus vaccine to the national immunisation program will depend heavily on its cost-effectiveness and affordability. The objective of this study was to assess the cost-effectiveness of including the pentavalent rotavirus vaccine in Mexico's national immunisation program. METHODS: A cost-effectiveness model was developed from the perspective of the health system, modelling the vaccination of a hypothetical birth cohort of 2 million children monitored from birth through 60 months of age. It compares the cost and disease burden of rotavirus in an unvaccinated cohort of children with one vaccinated as recommended at 2, 4, and 6 months. RESULTS: Including the pentavalent vaccine in the national immunisation program could prevent 71,464 medical visits (59%), 5,040 hospital admissions (66%), and 612 deaths from rotavirus gastroenteritis (70%). At US$10 per dose and a cost of administration of US$13.70 per 3-dose regimen, vaccination would cost US$122,058 per death prevented, US$4,383 per discounted life-year saved, at a total net cost of US$74.7 million dollars to the health care system. Key variables influencing the results were, in order of importance, case fatality, vaccine price, vaccine efficacy, serotype prevalence, and annual loss of efficacy. The results are also very sensitive to the discount rate assumed when calculated per life-year saved. CONCLUSION: At prices below US $15 per dose, the cost per life-year saved is estimated to be lower than one GNP per capita and hence highly cost effective by the WHO Commission on Macroeconomics and Health criteria. The cost-effectiveness estimates are highly dependent upon the mortality in the absence of the vaccine, which suggests that the vaccine is likely to be significantly more cost-effective among poorer populations and among those with less access to prompt medical care - such that poverty reduction programs would be expected to reduce the future cost-effectiveness of the vaccine.