OBJECTIVES: To establish the relative cost effectiveness of community leg ulcer clinics that use four layer compression bandaging versus usual care provided by district nurses. DESIGN: Randomised controlled trial with 1 year of follow up. SETTING: Eight community based research clinics in four trusts in Trent. SUBJECTS: 233 patients with venous leg ulcers allocated at random to intervention (120) or control (113) group. INTERVENTIONS: Weekly treatment with four layer bandaging in a leg ulcer clinic (clinic group) or usual care at home by the district nursing service (control group). MAIN OUTCOME MEASURES: Time to complete ulcer healing, patient health status, and recurrence of ulcers. Satisfaction with care, use of services, and personal costs were also monitored. RESULTS: The ulcers of patients in the clinic group tended to heal sooner than those in the control group over the whole 12 month follow up (log rank P=0.03). At 12 weeks, 34% of patients in the clinic group were healed compared with 24% in the control. The crude initial healing rate of ulcers in intervention compared with control patients was 1.45 (95% confidence interval 1.04 to 2. 03). No significant differences were found between the groups in health status. Mean total NHS costs were 878.06 pounds per year for the clinic group and 859.34 pounds for the control (P=0.89). CONCLUSIONS: Community based leg ulcer clinics with trained nurses using four layer bandaging is more effective than traditional home based treatment. This benefit is achieved at a small additional cost and could be delivered at reduced cost if certain service configurations were used.