Summary Purpose Due to differences in epilepsy types and surgery, economic evaluations of epilepsy treatment in adults cannot be extrapolated to children. We evaluated the cost-effectiveness of epilepsy surgery compared to medical treatment in children with intractable epilepsy. Method Decision tree analysis was used to evaluate the cost-effectiveness of surgery relative to medical management. Fifteen patients had surgery and 15 had medical treatment. Cost data included inpatient and outpatient costs for the period April 2007 to September 2009, physician fee, and medication costs. Outcome measure was percentage seizure reduction at one-year follow-up. Incremental cost-effectiveness ratio (ICER) was assessed. Sensitivity analysis was performed for different probabilities of surgical and medical treatment outcomes and costs, and surgical mortality or morbidity. Results More patients managed surgically experienced Engel class I and II outcomes compared to medical treatment at one-year follow-up. Base-case analysis yielded an ICER of $369 per patient for each percentage reduction in seizures for the surgery group relative to medical group. Sensitivity analysis showed robustness for the different probabilities tested. Conclusion Surgical treatment resulted in greater reduction in seizure frequency compared to medical therapy and was a cost-effective treatment option in children with intractable epilepsy who were evaluated for epilepsy surgery and subsequently underwent surgery compared to continuing medical therapy. However, larger sample size and long-term follow-up are needed to validate these findings.