Objective:To examine the cost‐effectiveness of the West Los Angeles Preterm Birth Prevention Project.Methods:Maternal and neonatal care data were collected on all preterm deliveries (150) and a random sample of term deliveries (140) from high‐risk patients at both experimental and control clinic sites. Costs were determined for prenatal care, inpatient preterm labor, delivery and postpartum care, and newborn care. Cost calculations, weighted by the actual proportions of term and preterm births, were confirmed with square‐root transformation and trimmed mean (2%) values.Results:When compared to control clinic high‐risk patients, experimental clinic high‐risk patients had an average cost savings of $2196 for newborn care (P= .02), resulting in a net savings of $1768 per high‐risk mother‐infant pair. Births before 32 weeks' gestation accounted for the greatest mean cost.Conclusion:Programs of comprehensive prenatal care and patient education may be highly cost‐effective for prevention of prematurity.(Obstet Gynecol 1994;83:506‐11)