BACKGROUND: The objective of this study was to compare the economic impact of complete decongestive therapy and lymphovenous bypass in the management of upper extremity lymphedema. METHODS: Economics were modeled for a patient with breast cancer-related lymphedema undergoing three different clinical pathways: (1) complete decongestive therapy alone; (2) lymphovenous bypass no longer requiring ongoing complete decongestive therapy; or (3) lymphovenous bypass requiring ongoing complete decongestive therapy. Activity-based cost analysis identified costs incurred with complete decongestive therapy and lymphovenous bypass. Costs were retrieved from supplier price lists, physician fee schedules, lymphedema therapists, and literature reviews. The net present value of all costs incurred for each clinical pathway were calculated. RESULTS: The estimated net present value of all costs for a patient with breast cancer-related lymphedema undergoing treatment were as follows: (1) complete decongestive therapy alone ($30,400); (2) lymphovenous bypass no longer requiring ongoing complete decongestive therapy ($15,000); or (3) lymphovenous bypass requiring ongoing complete decongestive therapy ($42,100). The expected net present value of all costs for lymphovenous bypass was $26,800, which was comparable to that of complete decongestive therapy alone. Sensitivity analysis demonstrated that the expected net present value of lymphovenous bypass was dependent on the patient's life expectancy, number of bypass anastomoses, and likelihood of discontinuing complete decongestive therapy. CONCLUSIONS: Lymphedema has substantial ongoing costs irrespective of the treatment modality. The cost of lymphovenous bypass appears comparable to that of complete decongestive therapy alone-the surgical costs of lymphovenous bypass are offset by the savings from discontinued ongoing therapy. Despite its limitations as a theoretical economic model, this study provides insight into the potential economic impact of lymphovenous bypass.