BACKGROUND: Evaluation of rectal bleeding in young patients is a frequent diagnostic challenge. OBJECTIVE: To determine the relative cost-effectiveness of alternative diagnostic strategies for young patients with rectal bleeding. DESIGN: Cost-effectiveness analysis using a Markov model. DATA SOURCES: Probability estimates were based on published medical literature. Cost estimates were based on Medicare reimbursement rates and published medical literature. TARGET POPULATION: Persons 25 to 45 years of age with otherwise asymptomatic rectal bleeding. TIME HORIZON: The patient's lifetime. PERSPECTIVE: Modified societal perspective. INTERVENTIONS: Diagnostic strategies included no evaluation, colonoscopy, flexible sigmoidoscopy, barium enema, anoscopy, or any feasible combination of these procedures. OUTCOME MEASURES: Life expectancy and costs. RESULTS OF BASE-CASE ANALYSIS: For 35-year-old patients, the no-evaluation strategy yielded the least life expectancy. The incremental cost-effectiveness of flexible sigmoidoscopy compared with no evaluation or with any strategy incorporating anoscopy (followed by further evaluation if no anal disease was found on anoscopy) was less than $5300 per year of life gained. A strategy of flexible sigmoidoscopy plus barium enema yielded the greatest life expectancy, with an incremental cost of $23 918 per additional life-year gained compared with flexible sigmoidoscopy alone. RESULTS OF SENSITIVITY ANALYSIS: As patient age at presentation of rectal bleeding increased, evaluation of the entire colon became more cost-effective. The incremental cost-effectiveness of flexible sigmoidoscopy plus barium enema compared with colonoscopy was sensitive to estimates of the sensitivity of the tests. In a probabilistic sensitivity analysis comparing flexible sigmoidoscopy with anoscopy followed by flexible sigmoidoscopy if needed, the middle 95th percentile of the distribution of the incremental cost-effectiveness ratios ranged from flexible sigmoidoscopy yielding an increased life expectancy at reduced cost to $52 158 per year of life gained (mean, $11 461 per year of life saved). CONCLUSIONS: Evaluation of the colon of persons 25 to 45 years of age with otherwise asymptomatic rectal bleeding increases the life expectancy at a cost comparable to that of colon cancer screening.