Background: Cost-effectiveness of radiofrequency ablation (RFA) was assessed in treatment of hepatocellular carcinoma (HCC). Patients and methods: During 5 years, 153 patients with HCC of 3 cm or less received RFA, and 60 underwent Surgery. Judgment after RFA C therapy was classified into three grades: residual tumor (grade 1), necrotic area with a less safety margin of 5 mm (grade 2),and necrosis with a safety margin of 5 mm in all directions (grade 3). Results: Local recurrence rates after RFA and surgery were 7.9% and 0% at the third year. The rates in patients with grades 2 and 3 after RFA were 18.7% and 1.2% at the third year, respectively (P = 0.0005). Among 91 patients with grades I and 2 necrosis after initial therapy, 52 received additional ablation. Although local recurrence rate was 24.9% in 39 patients without additional therapy, the rates after therapy repetition were 10.9% in 21 patients with eventual grade 2 necrosis, and 0% in 31 patients with grade 3 (P = 0.038). Median costs of single RFA, repeated RFA, and Surgery were Y849,900, Y1,086,000, and V 1,745, 100, respectively. Additional ablation reduced local recurrence by 20.7% at the cost of Y236,100. Conclusion: Cost-effectiveness of RFA in the treatment of small HCC was superior to that Of Surgery. (c) 2005 Elsevier Ireland Ltd. All rights reserved.