Aims: The aim of this study was to evaluate the cost-effectiveness of arthroscopic partial meniscectomy versus physical therapy plus optional delayed arthroscopic partial meniscectomy in young patients aged under 45 years with traumatic meniscal tears. Methods: We conducted a multicentre, open-labelled, randomized controlled trial in patients aged 18 to 45 years, with a recent onset, traumatic, MRI-verified, isolated meniscal tear without knee osteoarthritis. Patients were randomized to arthroscopic partial meniscectomy or standardized physical therapy with an optional delayed arthroscopic partial meniscectomy after three months of follow-up. We performed a cost-utility analysis on the randomization groups to compare both treatments over a 24-month follow-up period. Cost utility was calculated as incremental costs per quality-adjusted life year (QALY) gained of arthroscopic partial meniscectomy compared to physical therapy. Calculations were performed from a healthcare system perspective and a societal perspective. Results: A total of 100 patients were included: 49 were randomized to arthroscopic partial meniscectomy and 51 to physical therapy. In the physical therapy group, 21 patients (41%) received delayed arthroscopic partial meniscectomy during follow-up. Over 24 months, patients in the arthroscopic partial meniscectomy group had a mean 0.005 QALYs lower quality of life (95% confidence interval -0.13 to 0.14). The cost-utility ratio was €-160,000/QALY from the healthcare perspective and €-223,372/QALY from the societal perspective, indicating that arthroscopic partial meniscectomy incurs additional costs without any added health benefit. Conclusion: Arthroscopic partial meniscectomy is arthroscopic partial meniscectomy is unlikely to be cost-effective in treating young patients with isolated traumatic meniscal tears compared to physical therapy as a primary health intervention. Arthroscopic partial meniscectomy leads to a similar quality of life, but higher costs, compared to physical therapy plus optional delayed arthroscopic partial meniscectomy.