Background: Erythromycin is a potent stimulator of gastrointestinal motility. Recent studies have examined the use of intravenous erythromycin to clear the stomach of blood before oesophago-gastroduodenoscopy (EGD) for acute upper gastrointestinal haemorrhage (UGIH). These studies have shown clinical effectiveness. Aim: To evaluate the cost-effectiveness of this intervention. Methods: We sought to determine the cost-effectiveness of erythromycin before EGD from the payer's perspective. We found three relevant studies of erythromycin and used these data for the analysis. We obtained costs for intravenous erythromycin and charges for peptic ulcer hospitalization, EGD, surgery, and angiographic embolization. Complication rates were also incorporated from the literature. We implemented a model of health-related quality of life to measure the impact of the intervention. We created a decision-analysis tree and performed a probabilistic sensitivity analysis. Results: A strategy of erythromycin prior to EGD resulted in a cost-effective outcome in a majority of trials using willingness-to-pay figures of $0, $50 000 and $100 000 (US) per quality-adjusted life-year (QALY). Conclusion: Because of the implications for cost saving and increase in QALY, we would recommend giving erythromycin prior to EGD for UGIH. © 2007 The Authors.