Background Recombinant human activated protein C was shown in the Recombinant Human Activated Protein C Worldwide Evaluation in Severe Sepsis (PROWESS) study to reduce mortality among patients with severe sepsis. A post hoc reanalysis by the Food and Drug Administration (FDA) of data from this study suggested that the reduction in mortality was restricted to patients with Acute Physiology and Chronic Health Evaluation (APACHE II) scores of 25 or more. Methods We estimated the cost effectiveness of activated protein C as compared with conventional care for patients with severe sepsis. We performed an economic analysis involving all patients, as well as analyses of subgroups defined according to age and severity of illness. The probabilities of transition between clinical states and the estimates of resource use were derived from a population-based cohort of patients with severe sepsis. We used data on the effectiveness of activated protein C from the PROWESS study and analyses by the FDA. Results The cost per life-year gained by treating all patients with activated protein C was 27,936.ItwasmorecosteffectivetotreatpatientswithanAPACHEIIscoreof25ormore( 24,484 per life-year gained) than those with a lower APACHE II score (35,632perlife-yeargained).ThecosteffectivenessoftreatingpatientswithanAPACHEIIscoreof24orlessincreasedto 575,054 per life-year gained when the FDA's estimates of effectiveness were considered. For patients with an APACHE II score of 25 or more, the cost per life-year gained increased with age (16,309forpatientslessthan40yearsofage; 28,100 for those 80 years of age or older). Conclusions Activated protein C is relatively cost effective when targeted to patients with severe sepsis, greater severity of illness (an APACHE II score of 25 or more), and a reasonable life expectancy if they survive the episode of sepsis. Further research is needed to determine the cost effectiveness of activated protein C for patients with sepsis and less severe illness.