BACKGROUND: Identification of economical interventions to decrease HIV-1 transmission to children is an urgent public-health priority in sub-Saharan Africa. We assessed the cost effectiveness of the HIVNET 012 nevirapine regimen. METHODS: We assessed cost effectiveness in a hypothetical cohort of 20,000 pregnant women in sub-Saharan Africa. Our main outcome measures were programme cost, paediatric HIV-1 cases averted, cost per case averted, and cost per disability-adjusted life-year (DALY). We compared HIVNET 012 with other short-course antiretroviral regimens. We also compared two implementation strategies: counselling and HIV-1 testing before treatment (targeted treatment), or nevirapine for all pregnant women (universal treatment, no counselling and testing). We did univariate and multivariate sensitivity analyses. FINDINGS: For universal treatment with 30% HIV-1 seroprevalence, the HIVNET 012 regimen would avert 603 cases of HIV-1 in babies, cost US$83,333, and generate 15,862 DALYs. The associated cost-effectiveness ratios were $138 per case averted or $5.25 per DALY. At 15% seroprevalence, the universal treatment option would cost $83,333 and avert 302 cases at $276 per case averted or $10.51 per DALY. For targeted treatment at 30% seroprevalence, HIVNET 012 would cost $141,922 and avert 476 cases at $298 per case averted or $11.29 per DALY. With seroprevalence higher than 3.0% for universal and 4.5% for targeted treatment, the HIVNET 012 regimen was likely to be as cost effective as other public-health interventions. The cost effectiveness of HIVNET 012 was robust under a wide range of parameters in the sensitivity analysis. INTERPRETATION: The HIVNET 012 regimen can be highly cost-effective in high seroprevalence settings. In lower seroprevalence areas, when multidose regimens are not cost effective, nevirapine therapy could have a major public-health impact at a reasonable cost.