Tissue plasminogen activator (tPA) has been shown to improve 3-month outcome in stroke patients treated within 3 hours of symptom onset. The costs associated with this new treatment will be a factor in determining the extent of its utilization. Data from the NINDS rt-PA Stroke Trial and the medical literature were used to estimate the health and economic outcomes associated with using tPA in acute stroke patients. A Markov model was developed to estimate the costs per 1,000 patients eligible for treatment with tPA compared with the costs per 1,000 untreated patients. One-way and multiway sensitivity analyses (using Monte Carlo simulation) were performed to estimate the overall uncertainty of the model results. In the NINDS rt-PA Stroke Trial, the average length of stay was significantly shorter in tPA-treated patients than in placebo-treated patients (10.9 versus 12.4 days; p = 0.02) and more tPA patients were discharged to home than to inpatient rehabilitation or a nursing home (48% versus 36%;p = 0.002). The Markov model estimated an increase in hospitalization costs of $1.7 million and a decrease in rehabilitation costs of $1.4 million and nursing home cost of $4.8 million per 1,000 eligible treated patients for a health care system that includes acute through long-term care facilities. Multiway sensitivity analysis revealed a greater than 90% probability of cost savings. The estimated impact on long-term health outcomes was 564 (3 to 850) quality-adjusted life-years saved over 30 years of the model per 1,000 patients. Treating acute ischemic stroke patients with tPA within 3 hours of symptom onset improves functional outcome at 3 months and is likely to result in a net cost savings to the health care system.