A randomised controlled trial comparing an accelerated rehabilitation program after proximal femoral fracture with conventional care and rehabilitation was conducted with 252 elderly patients treated at an Australian general hospital in 1989/1990. This paper presents a cost-effectiveness analysis of the accelerated rehabilitation program. The measure of cost was all direct costs of treatment and subsequent care (medical and non-medical) incurred during the 4 months after fracture. Effectiveness was defined as whether the patient returned to semi-independent living; or if moderately or severely disabled prior to the fracture to the premorbid level of physical independence. The cost for treatment up to 4 months after fracture was estimated at A$ 10,600 per accelerated rehabilitation patient and A$ 12,800 per conventional care patient (1990 Australian dollars, A$). Thus, accelerated rehabilitation releases resources equivalent to approximately 17% of costs for treatment per patient. When cost effectiveness is considered, the potential cost savings rise to 38% per recovered patient.