Objective: The purpose of this research was to assess the local cost savings resulting from community water fluoridation, given current exposure levels to other fluoride sources. Methods: Adopting a societal perspective and using a discount rate of 4 percent, we compared the annual per person cost of fluoridation with the cost of averted disease and productivity losses. The latter was the product of annual dental caries increment in nonfluoridated communities, fluoridation effectiveness, and the discounted lifetime cost of treating a carious tooth surface. We obtained or imputed all parameters from published studies and national surveys. We conducted one-way and three-way sensitivity analyses. Results: With basecase assumptions, the annual per person cost savings resulting from fluoridation ranged from $15.95 in very small communities to $18.62 in large communities. Fluoridation was still cost saving for communities of any size if we allowed increment, effectiveness, or the discount rate to take on their worst-case values, individually. For simultaneous variation of variables, fluoridation was cost saving for all but very small communities. There, fluoridation was cost saving if the reduction in carious surfaces attributable to one year of fluoridation was at least 0.046. Conclusion: On the basis of the most current data available on the effectiveness and cost of fluoridation, caries increment, and the cost and longevity of dental restorations, we find that water fluoridation offers significant cost savings.