BACKGROUND: Although antiviral therapy is cost-effective in adults, its cost-effectiveness in older adults has not been studied. OBJECTIVE: To determine the cost-effectiveness of influenza testing and treatment strategies for older adults. DESIGN: Cost-utility decision model. DATA SOURCES: Clinical trials of antiviral drugs and epidemiologic data. TARGET POPULATION: Noninstitutionalized adults older than 65 years of age with influenza-like illness. TIME HORIZON: Lifetime. PERSPECTIVE: Societal. INTERVENTIONS: Rapid diagnostic testing or empirical therapy with antiviral drugs. OUTCOME MEASURES: Cost per quality-adjusted life-year (QALY) saved. RESULTS OF BASE-CASE ANALYSIS: Compared with no intervention, empirically treating an unvaccinated 75-year-old patient with amantadine increased life expectancy by 0.0014 QALY at a cost of 1.57 dollars, a cost-effectiveness ratio of 1129 dollars per QALY saved. Compared with amantadine, rapid diagnostic testing followed by treatment with oseltamivir cost 5025 dollars per QALY saved and empirical treatment with oseltamivir cost 10,296 dollars per QALY saved. Testing and treatment strategies were less cost-effective if the patient was vaccinated, ranging from 2483 dollars per QALY saved with amantadine to 70,300 dollars per QALY saved with oseltamivir. RESULTS OF SENSITIVITY ANALYSIS: The decision was sensitive to the probability of influenza, the efficacy of oseltamivir in preventing hospitalizations, and hospitalization and case-fatality rates. The decision was not sensitive to the probability or severity of medication side effects, the quality of life for influenza illness or hospitalization, the efficacy of antiviral therapy in shortening influenza illness, or the rapid diagnostic test characteristics. CONCLUSIONS: For unvaccinated or high-risk vaccinated patients during the influenza season, empirical oseltamivir treatment is cost-effective. For other patients, rapid diagnostic testing followed by treatment with oseltamivir is cost-effective. Empirical amantadine treatment offers a low-cost alternative if patients cannot afford oseltamivir.