OBJECTIVES: To estimate the impact of male circumcision on HIV incidence, the number of procedures per HIV infection averted, and costs per infection averted. METHODS: A stochastic simulation model with empirically derived parameters from a cohort in Rakai, Uganda was used to estimate HIV incidence, assuming that male circumcision reduced the risks of HIV acquisition with rate ratios (RR) ranging from 0.3 to 0.6 in men, their female partners, and in both sexes combined, with circumcision coverage 0-100%. The reproductive number (R0) was also estimated. The number of HIV infections averted per circumcision was estimated from the incident cases in the absence of surgery minus the projected number of incident cases over 10 years following circumcision. The cost per procedure ($69.00) was used to estimate the cost per HIV infection averted. RESULTS: Baseline HIV incidence was 1.2/100 person-years. Male circumcision could markedly reduce HIV incidence in this population, particularly if there was preventative efficacy in both sexes. Under many scenarios, with RR < or = 0.5, circumcision could reduce R0 to < 1.0 and potentially abort the epidemic. The number of surgeries per infection averted over 10 years was 19-58, and the costs per infection averted was $1269-3911, depending on the efficacy of circumcision for either or both sexes, assuming 75% service coverage. However, behavioral disinhibition could offset any benefits of circumcision. CONCLUSION: Male circumcision could have substantial impact on the HIV epidemic and provide a cost-effective prevention strategy if benefits are not countered by behavioral disinhibition.