Hematopoietic stem cell transplantation (HSCT) is the only cure for thalassemia major (TM), which inflicts a significant 1-time cost. Hence, it is important to explore the cost effectiveness of HSCT versus lifelong regular transfusion-chelation (TC) therapy. This study was undertaken to estimate incremental cost per quality-adjusted life-year (QALY) gained with the intervention group HSCT, and the comparator group TC, in TM patients. A combination of decision tree and Markov model was used for analysis. A hospital database, supplemented with a review of published literature, was used to derive input parameters for the model. A lifetime study horizon was used and future costs and consequences were discounted at 3%. Results are presented using societal perspective. Incremental cost per QALY gained with use of HSCT as compared with TC was 64,096 (US$986) in case of matched related donor (MRD) and 1,67,657 (US$2579) in case of a matched unrelated donor transplantation. The probability of MRD transplant to be cost effective at the willingness to pay threshold of Indian per capita gross domestic product is 94%. HSCT is a long-term value for money intervention that is highly cost effective and its long-term clinical and economic benefits outweigh those of TC.