Abstract: Because of the severe complications that may result from varicella zoster virus (VZV) infection following renal transplantation (Tx), transplanted varicella-susceptible children exposed to varicella are typically given varicella zoster immunoglobulin (VZIG) as prophylaxis or are admitted and treated with parenteral acyclovir if VZIG prophylaxis fails. As both VZIG and hospitalization are costly, prevention of varicella infection by vaccination could potentially result in significant cost savings in addition to decreasing morbidity and mortality. To test this hypothesis, we developed a decision-analysis model to evaluate the cost-effectiveness of vaccinating patients with chronic renal failure (CRF) against varicella prior to renal transplant. Under baseline assumptions, vaccination for varicella pretransplant was a cost-effective strategy, with a cost of $211 per patient vaccinated compared with $1,828 per patient not vaccinated. The magnitude of cost savings from vaccination was sensitive to variations in the cost of varicella vaccine, the percentage of patients hospitalized for treatment with acyclovir, and the percentage of patients exposed to varicella infection. One- and two-way sensitivity analyses confirmed that vaccination was the dominant cost-effective strategy under all conditions examined. We conclude that vaccination for varicella pretransplant is cost-effective for patients with CRF, and that the magnitude of cost savings is sensitive to the cost of hospitalization, the percentage of patients exposed to varicella, and the cost of varicella vaccination. Pending results of ongoing studies of the safety and efficacy of VZV vaccine in children with CRF, we recommend that VZV vaccine be given to all children with CRF.