The cost effectiveness of estrogen use in postmenopausal women was analyzed with use of data from the medical and epidemiologic literature. Risks of endometrial cancer, uterine bleeding, and gallbladder disease were weighed against benefits associated with relief of menopausal symptoms and with prevention of osteoporosis and consequent fractures. Net effects on life expectancy are probably small in either direction, although they are likely to be positive in women with existing osteoporosis or prior hysterectomy. Treatment appears to be relatively cost effective in menopausal women with prior hysterectomy or osteoporosis but does not appear to be cost effective as a prophylactiv measure in asymptomatic women with intact uteri. For women with menopausal symptoms and intact uteri, the decision to prescribe estrogens for the individual patient and the cost effectiveness of estrogen use at the societal level depend critically on the subjective values assigned to symptomatic relief.