Background: Macular edema is the most common cause of vision loss among patients with diabetes. Objective: To determine the cost-effectiveness of different treatments of diabetic macular edema (DME). Design: Markov model. Data Sources: Published literature and expert opinion. Target Population: Patients with clinically significant DME. Time Horizon: Lifetime. Perspective: Societal. Intervention: Laser treatment, intraocular injections of triamcinolone or a vascular endothelial growth factor (VEGF) inhibitor, or a combination of both. Outcome Measures: Discounted costs, gains in quality-adjusted life-years (QALYs), and incremental cost-effectiveness ratios (ICERs). Results of Base-Case Analysis: All treatments except laser monotherapy substantially reduced costs, and all treatments except triamcinolone monotherapy increased QALYs. Laser treatment plus a VEGF inhibitor achieved the greatest benefit, gaining 0.56 QALYs at a cost of $6975 for an ICER of $12 410 per QALY compared with laser treatment plus triamcinolone. Monotherapy with a VEGF inhibitor achieved similar outcomes to combination therapy with laser treatment plus a VEGF inhibitor. Laser monotherapy and triamcinolone monotherapy were less effective and more costly than combination therapy. Results of Sensitivity Analysis: VEGF inhibitor monotherapy was sometimes preferred over laser treatment plus a VEGF inhibitor, depending on the reduction in quality of life with loss of visual acuity. When the VEGF inhibitor bevacizumab was as effective as ranibizumab, it was preferable because of its lower cost. Limitation: Long-term outcome data for treated and untreated diseases are limited. Conclusion: The most effective treatment of DME is VEGF inhibitor injections with or without laser treatment. This therapy compares favorably with cost-effective interventions for other conditions.