313 patients with subacromial impingement were randomized to either arthroscopic subacromial decompression, arthroscopic irrigation alone, or no treatment. The purpose of this study was to explore cost-effectiveness of arthroscopic subacromial decompression compared to no treatment and arthroscopic irrigation alone, assessed after 6- and 12-month follow-up. Quality-adjusted life-years gained significantly favoured decompression compared to no treatment, and demonstrated no significant difference between decompression and arthroscopic irrigation alone. Total operative cost was significantly higher in the decompression group compared to the two other groups, while follow-up health service use cost was significantly higher with decompression versus no treatment and not significantly different between decompression and arthroscopic irrigation. Resulting incremental cost-effectiveness ratios demonstrated 0% probability and 50% probability of decompression being considered cost-effective compared to no treatment after 6 and 12 months, respectively, at a willingness-to-pay threshold of £20,000. Relative to arthroscopic irrigation alone, decompression demonstrated a 23% probability and 46% probability of being considered cost-effective after 6 and 12 months, respectively, also at a willingness-to-pay threshold of £20,000.