Technical advances have given medicine the opportunity to refine current treatment techniques to improve outcomes. Computed tomography, magnetic resonance imaging and high energy linear accelerators are but a few examples of technology translating into clinical practice. Intensity-modulated radiation therapy is a form of 3D conformal radiation that is being increasingly incorporated into the management of patients with prostate cancer. As with any new technology, the cost of intensity-modulated radiation therapy is considerably greater than standard therapy. Economic models can be useful to compare treatments when this comparison cannot be performed in a clinical trial. A Markov Model was used to compare the use of intensity-modulated radiation with 3D conformal radiation therapy in the treatment of a 70 year old man with a good- and intermediate-risk prostate cancer. Cost data for men with Medicare insurance and prostate cancer treated with intensity-modulated radiation therapy and 3D conformal radiation therapy was obtained from the billing department at the Fox Chase Cancer Center (PA, USA). Utilities were collected from men undergoing intensity-modulated radiation therapy and 3D conformal radiation therapy for prostate cancer. Intensity-modulated radiation therapy was found to be cost effective in the treatment of a 70 year old man with prostate cancer with a incremental cost-effectiveness ratio of USD 16,182/quality-adjusted life year for men with intermediate-risk prostate cancer and USD 17,448/ quality-adjusted life year for men with good-risk prostate cancer. Sensitivity analysis found that a longer time horizon of the analysis and younger age at treatment favorably impact the cost-effectiveness ratio.