Objectives: To determine the cost-effectiveness of auditory brainstem response prior to MRI (ABR-MRI) compared to standalone MRI to diagnose vestibular schwannoma. Design: A state transition decision-analytic model was developed to simulate costs and effects (quality-adjusted life years) for both treatment strategies for patients suspected of a vestibular schwannoma. Model input was derived from literature, hospital databases, and expert opinions. Scenario and sensitivity analyses addressed model uncertainty. Results: Over a lifetime horizon, ABR-MRI resulted in a limited cost-saving of \euro68 or \euro98 per patient (dependent on MRI sequence) and a health loss of 0.005 QALYs over standalone MRI. ABR-MRI, however, did miss patients with other important pathology (2% of the population) that would have been detected when using standalone MRI. Calculating the incremental cost-effectiveness ratio resulted in \euro14,203 or \euro19,550 saved per lost QALY if ABR-MRI was used instead of standalone MRI. The results were sensitive to the detection rate of vestibular schwannoma and health-related quality of life of missed patients. Conclusion: The cost-saving with ABR-MRI does not seem to outweigh the number of missed patients with VS and other important pathologies that would have been detected when using standalone MRI.