Background Millions of peripheral intravenous catheters are used worldwide. The current guidelines recommend routine catheter replacement every 72-96 h. This practice requires increasing healthcare resource use. The clinically indicated catheter replacement strategy is proposed as an alternative. Objectives To assess the cost effectiveness of clinically indicated versus routine replacement of peripheral intravenous catheters. Methods A cost-effectiveness analysis from the perspective of Queensland Health, Australia, was conducted alongside a randomized controlled trial. Adult patients with an intravenous catheter of expected use for longer than 4 days were randomly assigned to receive either clinically indicated replacement or third-day routine replacement. The primary outcome was phlebitis during catheterization or within 48 h after catheter removal. Resource use data were prospectively collected and valued (2010 prices). The incremental net monetary benefit was calculated with uncertainty characterized using bootstrap simulations. Additionally, value of information (VOI) and value of implementation analyses were performed. Results The clinically indicated replacement strategy was associated with a cost saving per patient of AU$7.60 (95 % confidence interval [CI] 4.96-10.62) and a non-significant difference in the phlebitis rate of 0.41 % (95 % CI -1.33 to 2.15). The incremental net monetary benefit was AU$7.60 (95 % CI 4.96-10.62). The expected VOI was zero, whereas the expected value of perfect implementation of the clinically indicated replacement strategy was approximately AU$5 million over 5 years. Conclusion The clinically indicated catheter replacement strategy is cost saving compared with routine replacement. It is recommended that healthcare organizations consider changing to a policy whereby catheters are changed only if clinically indicated.