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Aim: To compare the costs of midazolam and droperidol for the management of acute agitation in the emergency department (ED). Method: A decision analysis model was used to undertake a cost-minimisation analysis of resource utilisation in the ED of a Melbourne hospital. Data from acutely agitated patients who received midazolam (n = 74) or droperidol (n = 79) in a randomised clinical trial (February 2002 to April 2004) were reviewed. Results: All direct medical and non-medical costs relating to the management of acute agitation in the ED were analysed. The average cost scenario was estimated for the 2 treatments. The model simulated 9 possible outcomes based on whether patients were ‘sedated’ or ‘not sedated’ and whether they required ‘re-dosing’ or ‘no re-dosing’. Hospitalisation cost incorporated multiple items as part of the average cost per service code for the ED length of stay. In the base case analysis, midazolam was associated with notably less overall drug costs (A$3.05 vs A$21.10), which contributed to less total treatment costs. The ‘expected’ median ED length of stay was marginally longer in the midazolam group (12 vs 11.8 hours), resulting in slightly higher hospitalisation costs (A$1370 vs A$1361). The midazolam group incurred higher median costs for pathology (A$78.60 vs A$61.60) and imaging (A$5.25 vs A$0.60). The cost of electrocardiograms was similar (A$27.10 vs A$28). With a cost advantage of A$59 per patient, midazolam was 3.8% less costly than droperidol (A$1496 vs A$1555). Conclusion: Midazolam was marginally more cost saving than droperidol when used to manage acute agitation in the ED. Several challenges were identified that need to be overcome to enable future robust pharmacoeconomic studies. J Pharm Pract Res 2012; 42: 11-16.