Objective: The objective of this study was to determine the costs and outcomes of inguinal-femoral lymph node dissection (IF-LND) versus sentinel lymph node biopsy (SLNB) for the management of early-stage vulvar cancer. Methods: A cost-effectiveness model compared 2 different strategies for the management of early-stage vulvar cancer: (1) vulvectomy and SLNB and (2) vulvectomy and IF-LND. Probabilities of inguinal-femoral node metastases and recurrence rates associated with each strategy were estimated from published data. Actual payer costs of surgery and radiation therapy were obtained using 2012 CPT codes and Medicare payment information. Rates and costs of postoperative complications including lymphedema, lymphocyst formation, and infection were estimated and included in a separate model. Cost-effectiveness ratios were determined for each strategy. Sensitivity analyses were performed to evaluate pertinent uncertainties in the models. Results: For the estimated 3000 women diagnosed annually with early-stage vulvar cancer in the United States, the annual cost of the SLNB strategy is $65.2 million compared with $76.8 million for the IF-LND strategy. Three-year inguinal-femoral recurrence-free survival was similar between groups (96.9% vs 97.3%). This translates into a lower cost-effectiveness ratio for the SLNB strategy ($22,416), compared with the IF-LND strategy ($26,344). When adding complication costs to the model, cost-effectiveness ratios further favor the SLNB strategy ($23,711 vs $31,198). Sensitivity analysis revealed that the SLNB strategy remained cost-effective until the recurrence rate after a negative sentinel lymph node approaches 9%. Conclusions: Sentinel lymph node biopsy is the most cost-effective strategy for the management of patients with early-stage vulvar cancer due to lower treatment costs and lower costs due to complications.