Objectives Early childhood caries is a highly destructive dental disease which is compounded by the need for young children to be treated under general anaesthesia. In Australia, there are long waiting periods for treatment at public hospitals. In this paper, we examined the costs and patient outcomes of a prevention programme for early childhood caries to assess its value for government services. Design Cost-effectiveness analysis using a Markov model. Setting Public dental patients in a low socioeconomic, socially disadvantaged area in the State of Queensland, Australia. Participants Children aged 6 months to 6 years received either a telephone prevention programme or usual care. Primary and secondary outcome measures A mathematical model was used to assess caries incidence and public dental treatment costs for a cohort of children. Healthcare costs, treatment probabilities and caries incidence were modelled from 6 months to 6 years of age based on trial data from mothers and their children who received either a telephone prevention programme or usual care. Sensitivity analyses were used to assess the robustness of the findings to uncertainty in the model estimates. Results By age 6 years, the telephone intervention programme had prevented an estimated 43 carious teeth and saved 㶹 984 in healthcare costs per 100 children. The results were sensitive to the cost of general anaesthesia (cost-savings range 㳶 043-㹷 298) and the incidence of caries in the prevention group (cost-savings range 㵹 496-㸳 368) and usual care (cost-savings range 㴶 833-㹳 328), but there were cost savings in all scenarios. Conclusions A telephone intervention that aims to prevent early childhood caries is likely to generate considerable and immediate patient benefits and cost savings to the public dental health service in disadvantaged communities.