PURPOSE:This study evaluates the cost‐effectiveness of dynamic graciloplasty for intractable fecal incontinence.PATIENTS AND METHODS:The costs and effects of dynamic graciloplasty were measured in a prospective, longitudinal study and in a clinical trial. Forty‐three patients with intractable fecal incontinence were evaluated before and after dynamic graciloplasty. Costs were obtained from the hospital information system and from patient‐oriented questionnaires. We compared the costs of a dynamic graciloplasty with the costs of a colostomy. Colostomy costs were evaluated using a group of seven patients who had a stoma in place for incontinence for several years. Sensitivity analyses were included.RESULTS:Total direct costs of lifelong dynamic graciloplasty were $31,733 (United States dollars), costs of lifelong conventional treatment were $12,180 (United States), and costs of colostomy, including lifelong stoma care, were $71,576 (United States). The clinical success rate of dynamic graciloplasty was 74 percent. Quality of life after successful dynamic graciloplasty was better than with conventional treatment.CONCLUSION:We found that dynamic graciloplasty was more expensive than conventional treatment but resulted in a significantly higher quality of life. Stoma treatment was the least attractive alternative regarding both costs and effects. The Dutch Health Insurance Executive Board recommended reimbursement for the dynamic graciloplasty procedure.