Interferon alfa-2b is an effective but expensive way of treating basal cell carcinoma. In this paper, the cost-effectiveness of interferon relative to conventional treatment is considered. Circumstances where surgery is contra-indicated and would not otherwise be performed are not considered. The cost of achieving cure by interferon alfa-2b in the form of Intron A is compared with the cost of conventional treatment in four situations; simple lesions, lesions in which protacted healing is expected, lesions in areas where cosmetic result is important and large lesions where hospitalisation for skin grafting may be necessary. For simple lesions, treatment with interferon alfa-2b costs between $500 and $760 more per cure than conventional treatment. However, it is less expensive than conventional methods in cases that would require extensive home nursing or hospitalisation. The difference in cost in simple cases also represents the price which must be paid for the better cosmetic result achieved by interferon alfa-2b. In conclusion, interferon alfa-2b adds another effective option to the treatment of BCC but it is expensive. To exploit its advantages properly, it must be targeted on those who will benefit from it the most.