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Spasticity is relatively common among children with cerebral palsy. This condition can be painful, can severely impair a child's ability to perform basic tasks, and can place an enormous emotional and financial burden on the family. Intrathecal baclofen delivered via an implantable pump is an effective treatment option for children unresponsive to oral medication and needing generalized motor control. However, the initial investment for the delivery device and its surgical placement can be a barrier to access. A cost-effectiveness analysis of intrathecal baclofen for adults in the British health care system concluded that intrathecal baclofen offered good value for the money. No similar analysis of intrathecal baclofen has been conducted in the context of the US health care system, and no study has specifically examined cost-effectiveness of intrathecal baclofen in a pediatric population. The aim of this article is to assess the cost-effectiveness of intrathecal baclofen among children with severe spasticity of cerebral origin who have not responded to less invasive treatments such as oral medications relative to alternative medical and surgical therapy. The authors used mathematical modeling and computer simulation to estimate the incremental cost per quality-adjusted life-year for identical cohorts of children treated with intrathecal baclofen or alternative therapy over a 5-year episode of treatment. Data on treatment costs representative of these children were derived from a health insurance claims database that included both commercial and Medicaid data. Utility values used to construct quality-adjusted life-years were obtained from a panel of expert clinicians who used the Health Utilities Index-2 to rate health states associated with the course of treatment. On average, intrathecal baclofen therapy increased the 5-year cost of treatment by $49 000 relative to alternative treatment. However, this was accompanied by an average gain of 1.2 quality-adjusted life-years. The net result was an incremental cost-effectiveness ratio of $42 000 per quality-adjusted life-year, a figure well within the $50 000 to $100 000 range that is widely accepted as offering good value for the money.