Low adherence to adjuvant tamoxifen is associated with worse health outcomes but little is known about the cost-effectiveness of high adherence. We conducted an economic evaluation using data for all women with incident breast cancer between 1993 and 2000 who were subsequently prescribed tamoxifen in the Tayside region of Scotland. Patient-level, lifetime Markov models evaluated the impact of high vs low adherence to tamoxifen using linked prescribing, cancer registry, clinical cancer audit, hospital discharge and death records. Direct medical costs were estimated for each patient and quality-of-life weights were assigned. Recurrence information was collected by case note review and adherence calculated from prescribing records with low adherence classed below 80%. A total of 354 (28%) patients had a recorded recurrence and 504 (39%) died. Four hundred and seventy-five (38%) patients had low adherence over the treatment period, which was associated with reduced time to recurrence of 52% (P<0.001). Time to other cause mortality was also reduced by 23% (P=0.055) but this was not statistically significant. For an average patient over her lifetime, low adherence was associated with a loss of 1.43 (95% CI: 1.15-1.71) discounted life years or 1.12 (95% CI: 0.91-1.34) discounted quality-adjusted life years (QALYs) and increased discounted medical costs of £5970 (95% CI: £4644-£7372). Assuming a willingness to pay threshold of £25,000 per QALY, the expected value of changing a patient from low to high adherence is £33,897 (95% CI: £28,322-£39,652). Patients with low adherence have shorter time to recurrence, increased medical costs and worse quality of life. Interventions that encourage patients to continue taking their treatment on a daily basis for the recommended 5-year period may be highly cost-effective.