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Abstract Background Timely referral and diagnosis of Juvenile Idiopathic Arthritis (JIA) by a pediatric rheumatologist ensures early intervention to minimize long-term joint damage and disability. This study aimed to quantify the impact of delays in diagnosis on health service use, health-related quality of life (HRQoL) and associated costs to the health system. Methods A cost-utility analysis was conducted over a lifetime horizon from a health funder perspective in 2023 Australian dollars, comparing time from actively seeking treatment to formal diagnosis (< 6 months, 6 + months). Time to diagnosis, healthcare use, including medical investigations, health professional visits, hospitalizations and medications, was determined using The IMPACT Survey. Incremental costs were estimated by applying Australian government subsidy item costs (medications), schedule fees (medical services), and National Efficient Prices (hospitalizations). HRQoL was measured using Child Health Utility Instrument (CHU9D). Incremental Quality Adjusted Life Years (QALYs) were estimated using participants’ CHU9D utility values based on Australian preference weights and life expectancy. Costs and QALYs were present valued at 5% per annum. Sensitivity analyses were conducted for robustness. Results Over one-third (n = 61/163) of children were diagnosed 6 + months from actively seeking treatment. Compared with 6 + months, diagnosis within 6 months was associated with a lower use of health services, resulting in a mean annual decrease in costs for the healthcare funder of more than $10,000 per child. The majority of the cost savings were due to reductions in hospitalizations for pain, inflammation, and investigative procedures. There were also significant increases in HRQoL; 0.14 (95%CI 0.05, 0.23) utility value. The differences in health service use and HRQoL from timely diagnosis persisted over 20 years from diagnosis. Over a lifetime, the present value of healthcare cost savings was $208,458 (95%CI $45,388, $371,528) and the increase in HRQoL resulted in an additional 2.82 (95%CI 1.03, 4.61) QALYs per child. At a willingness to pay of $50,000 per QALY, the estimated net benefit to the health funder was $349,520 (95%CI $139,630, $559,411) per child. Conclusions Interventions to improve the time to diagnosis of JIA within six months are likely cost-effective and can significantly improve HRQoL for people living with JIA. Clinical trial registration (if any) Not applicable.