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Diabetic vitrectomy has been found to be efficacious for the treatment of vitreous hemorrhage secondary to diabetic retinopathy. The purpose of this study is to determine the cost-effectiveness of early vitrectomy for the management of vitreous hemorrhage secondary to diabetic retinopathy. The analysis was performed from the perspective of a third-party insurer. A cost-utility Markov model was used to determine the cost per quality-adjusted life year (QALY) gained from early versus deferral of vitrectomy. The model used 2-, 3-, and 4-year results from the Diabetic Retinopathy Vitrectomy Study, patient-based utilities, life expectancy data, and incremental medical costs. Early vitrectomy was the dominant strategy and was associated with a gain of 0.41 QALYs over the 57-year expected life span for a hypothetical patient. The cost per additional QALY gained from early vitrectomy treatment was $1910 (US$ discounted at 3%). When sensitivity analyses were performed by varying efficacy probabilities and utilities across their 95% confidence intervals, early treatment was always the dominant strategy. Additionally, even at the extreme sensitivity values, the cost per QALY of early vitrectomy treatment remained under $10,000. Overall, early vitrectomy for the treatment of vitreous hemorrhage secondary to diabetic retinopathy is highly cost-effective.