BACKGROUND: Dyspepsia can be managed by initial endoscopy and treatment based on endoscopic findings, or by empirical prescribing. We aimed to determine the cost effectiveness of initial endoscopy compared with usual management in patients with dyspepsia over age 50 years presenting to their primary care physician. METHODS: 422 patients were recruited and randomly assigned to initial endoscopy or usual management. Primary outcomes were effect of treatment on dyspepsia symptoms and cost effectiveness. Secondary outcomes were quality of life and patient satisfaction. Total costs were calculated from individual patient's use of resources with unit costs applied from national data. Statistical analysis of uncertainty on incremental cost-effectiveness ratio (ICER) was done along with a sensitivity analysis on unit costs with cost-effectiveness acceptability curves. FINDINGS: In the 12 months following recruitment, 213 (84%) patients had an endoscopy compared with 75 (41%) controls. Initial endoscopy resulted in a significant improvement in symptom score (p=0.03), and quality of life pain dimension (p=0.03), and a 48% reduction in the use of proton pump inhibitors (p=0.005). The ICER was Pound Sterling1728 (UK Pound Sterling) per patient symptom-free at 12 months. The ICER was very sensitive to the cost of endoscopy, and could be reduced to Pound Sterling165 if the unit cost of this procedure fell from Pound Sterling246 to Pound Sterling100. INTERPRETATION: Initial endoscopy in dyspeptic patients over age 50 might be a cost-effective intervention.