Parathyroid hormone (PTH) is a new treatment for osteoporosis and has been shown to reduce the risks of vertebral and non-vertebral fractures in postmenopausal women in clinical trials. The objective of this study was to estimate the cost-effectiveness of teriparatide in addition to calcium and vitamin D, using a simulation model. The base case analysis was conducted for a cohort of 69-year-old women in Sweden who had at least one previous vertebral fracture and low bone mineral density. The model simulated the course of events in 6-month cycles in individual patients until death or 100 years of age. During each cycle the patients were at risk of experiencing clinical vertebral, hip or wrist fractures, or death. Total accumulated life-time costs and quality-adjusted life years (QALYs) were estimated. Swedish data on fracture costs, utility reductions after fracture, fracture risks and mortality rates were used. The model incorporated new epidemiological evidence that indicates fracture risks and mortality rates are higher in the subsequent years post-fracture. The results showed that the cost-effectiveness of the treatment is highly dependant on the risk profile of the treated patients and the timing of starting treatment relative to previous fractures. The cost per QALY gained for treatment of a population of 69-year-olds with a T-score at the femoral neck of -3 was in the base case estimated to be between EUR (euro) 20,000 and 64,000 for patients with a recent or historic vertebral fracture respectively. The study provides further evidence of the benefit and cost-effectiveness of starting osteoporotic treatments early in patients with a new fracture, and also that teriparatide may provide valuable clinical benefits for these patients and may be considered a cost-effective intervention when targeted to the appropriate patients.