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HIV-infected infants have high risk of death in the first two years of life if untreated. WHO guidelines recommend early infant HIV diagnosis (EID) of all HIV-exposed infants and immediate antiretroviral therapy (ART) in HIV-infected children under 24-months. We assessed the cost-effectiveness of this strategy in HIV-exposed non-breastfed children in Thailand.A decision analytic model of HIV diagnosis and disease progression compared: EID using DNA PCR with immediate ART (Early-Early); or EID with deferred ART based on immune/clinical criteria (Early-Late); vs. clinical/serology based diagnosis and deferred ART (Reference). The model was populated with survival and cost data from a Thai observational cohort and the literature. Incremental cost-effectiveness ratio per life-year gained (LYG) was compared against the Reference strategy. Costs and outcomes were discounted at 3%.Mean discounted life expectancy of HIV-infected children increased from 13.3 years in the Reference strategy to 14.3 in the Early-Late and 17.8 years in Early-Early strategies. The mean discounted lifetime cost was $17,335, $22,583 and $29,108, respectively. The cost-effectiveness ratio of Early-Late and Early-Early strategies was $5,149 and $2,615 per LYG, respectively as compared to the Reference strategy. The Early-Early strategy was most cost-effective at approximately half the domestic product per capita per LYG ($4,420 in Thailand 2011). The results were robust in deterministic and probabilistic sensitivity analyses including varying perinatal transmission rates.In Thailand, EID and immediate ART would lead to major survival benefits and is cost- effective. These findings strongly support the adoption of WHO recommendations as routine care.