Background: The Australian National Tobacco Campaign (NTC) was an intensive mass media anti-smoking campaign, the first phase of which commenced in 1997, cost around $A9 million, and reduced smoking prevalence by 1.4%. Objective: To assess the cost-effectiveness of phase one of the NTC, which ran from June to November 1997. Design and study population: The quit benefits model (QBM), a Markov-cycle simulation model was used to predict the benefits of smoking cessation for the estimated 190 000 quitters from the time of quitting until death, censored at age 85 years. Measures of effectiveness were cases of lung cancer, acute myocardial infarction (AMI), stroke and chronic obstructive pulmonary disease (COPD) avoided; deaths prevented, and life-years and quality-adjusted life-years (QALYs) gained. The savings in healthcare costs through prevention of the four specified smoking-associated diseases were estimated. Future costs, life-years and QALYS were discounted at 3% per year. Results: The QBM predicted that the NTC avoided over 32 000 cases of COPD, 11 000 cases of AMI, 10 000 cases of lung cancer, and 2500 cases of stroke. Prevention of around 55 000 deaths, gains of 323 000 life-years and 407 000 QALYs, and healthcare cost savings of $A740.6 million were predicted. The NTC was therefore both cost saving and effective. Conclusions: As well as reducing smoking prevalence, the NTC was unequivocally cost-effective.