Objective: We report the clinical outcomes and direct medical costs of 155 patients with severe peptic ulcer hemorrhage and a nonbleeding visible vessel at emergency endoscopy treated with endoscopic hemostasis or medical- surgical therapy. Methods: In two consecutive, prospective, randomized, controlled trials, patients were randomly assigned to endoscopic hemostasis (heater probe, bipolar electrocoagulation, or injection sclerosis) or medical-surgical treatment. Study endpoints included the incidence of severe ulcer rebleeding and emergency surgery, length of hospital stay, blood transfusion requirements, mortality rate, and direct costs of utilized health care. Direct medical costs were estimated using combined fixed and variable institutional costs for consumed resources and Medicare reimbursement rates. Results: Compared with medical-surgical treatment, endoscopically treated patients had significantly lower rates of severe ulcer rebleeding (p = 0.004), emergency surgery (p = 0.002 and p = 0.019, 0.024), and blood transfusions (p = 0.025). Observed inter-trial differences in ulcer rebleeding rates may be partially explained in a multivariate model by covariates of comorbid disease and inpatient ulcer bleeding. In both trials, length of hospital stay, mortality rates, and treatment-related complications were similar. Estimated median direct costs per patient differed: The first trial had lower costs with endoscopic hemostasis ($4254, vs $4620 for electrocoagulation and $5909 for medical-surgical treatment), yet the second trial yielded lower costs with medical-surgical treatment ($3169, vs $3477 for injection sclerosis and $4098 for heater probe). Conclusions: Compared with medical-surgical therapy, endoscopic hemostasis for severe ulcer hemorrhage and a nonbleeding visible vessel yielded significantly better patient outcomes and was safe. This procedure may or may not yield lower direct medical costs and cost savings.