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Background: Anaemia is a common complication of chemotherapy. As anaemia can lead to e.g. fatigue, depression, social isolation and chest pain it diminishes physical capacity and quality of life. It is generally accepted that symptomatic anaemia should be corrected. Treatment options include red blood cell transfusion (RBCT), erythropoietin (EPO) administration or a combination of both., Objective: The objective of this study was to carry out a cost-effectiveness analysis of treatment with EPO (epoetin alfa), compared to treatment with RBCT for patients with chemotherapy-induced anaemia in Sweden from a health care perspective., Method: A model was developed for estimating incremental costs and QALY gains associated with EPO treatment compared to treatment with RBCTs, based on a model commissioned by the UK National Institute for Health and Clinical Excellence and adjusted to reflect Swedish treatment practice. Data regarding patient characteristics, response rates, and RBCT was derived from a Swedish observational study of EPO treatment in cancer patients with chemotherapy related anaemia. Swedish guidelines and unit costs were used throughout the study. A systematic review of EPO for treatment of anaemia associated with cancer was used to estimate QALY gains associated with changes in Hb-concentrations in our model., Results: The model's results validate well to real world data from three major hospitals in Sweden. The cost per QALY gained from administration of EPO was estimated at EUR 24,700 in the base case analysis. Practicing an EPO treatment target Hb-level of 12 g/dl yields a cost per QALY about 40% lower than practicing a Hb-target level of 13 g/dl, which is in agreement with updated recommendations of using a 12 g/dl target., Conclusion: The estimated cost per QALY falls well within the range acceptable in Sweden when practicing a Hb-target level of 12 g/dl. The incremental cost of elevating Hb-levels above 13 g/dl is very high in relation to the incremental QALY gain achieved.