Background: To assess, from a societal perspective, the incremental cost-effectiveness of laparoscopic adjustable gastric banding for severely obese adolescents in Australia. Methods: The intervention, modeled as a part of the Assessing Cost-Effectiveness in Obesity project, used evidence of the effectiveness and costs from a case series of 28 adolescents who had undergone gastric banding in Melbourne and extrapolated the data to the eligible Australian adolescent population. The cost offsets and disability-adjusted life year benefits (determined by the change in body mass index at 3 years after surgery) were tracked until the cohort had reached the age of 100 years or death and were discounted at 3% per annum. Simulation-modeling techniques were used to present a 95% uncertainty interval (UI) around the cost-effectiveness ratio. The intervention was also assessed against second-stage filter criteria ("equity," "strength of evidence," "acceptability, " "feasibility," "sustainability," and "side effects"). Results: The intervention reached 4120 severely obese, privately insured adolescents. It cost AUD130M (95% UI 52-265) and resulted in an incremental savings of 55,400 body mass index units (95% UI 12,600 -140,000) at 3 years after surgery, which translated into 12,300 disabilityadjusted life years (95% UI 5000-24,670) saved during their lifetime. The cost-offsets totaled AUD75M (95% UI 30.5-150), resulting in a net cost per disability-adjusted life year saved of AUD4400 (95% UI 2900-6120). Conclusions: Although the intervention was cost-effective using the current modeling assumptions, it is unlikely to be acceptable to all stakeholders, including some severely obese adolescents. Nevertheless, gastric banding has an important role in the management of morbid obesity in adolescents. © 2010 American Society for Metabolic and Bariatric Surgery. All rights reserved.