Background: Respiratory syncitial virus (RSV) is a common cause of bronchiolitis in infants. In children with congenital heart disease (CHD) it is associated with significant morbidity and mortality. Objective: To assess cost-savings, cost-effectiveness and cost-utility of palivizumab in children < 2 years with hemodynamically-significant CHD in a provincially-administered RSV prophylaxis program. Methods: Children who received palivizumab from 2003-2007 were compared to a historical cohort of children from 1998-2003 who met the eligibility criteria for palivizumab before it was available. Direct costs were obtained from hospital administrative data. Indirect costs were estimated from government sources. We assessed the incremental cost of the program, the cost to prevent one day of hospitalization, the life-years gained and cost per quality-adjusted life-year. Discounting was applied to all future costs and benefits. Results: The cost of palivizumab prophylaxis/patient/RSV season was $8,521. Costs in the historical cohort were $838/patient compared to $9,130/patient in the palivizumab cohort. Hospital admissions were reduced by 58%, and days in hospital were reduced by 88% in the palivizumab cohort. After accounting for the costs of hospitalization, the cost of the RSV prophylaxis program was $8,292/patient and the cost to prevent one day of hospitalization was $15,737. The cost per life-year gained was $111,118 and the cost per quality-adjusted life-year was $126,621. Conclusion: Palivizumab is clinically-effective in terms of reducing RSV-related hospitalization. However, the cost of palivizumab is high. Given the financial constraints in public health, strict criteria for patient selection and reduced drug costs will improve the cost-effectiveness of RSV prophylaxis.