Background The 23-valent pneumococcal polysaccharide vaccine (PPV23) has been funded under the Australia National Immunisation Program (NIP) since January 2005 for those aged >65 years and other risk groups. In 2016, PCV13 was accepted by the Pharmaceutical Benefits Advisory Committee (PBAC) as a replacement for a single dose of PPV23 in older Australian adults. Methods A single-cohort deterministic multi-compartment (Markov) model was developed describing the transition of the population between different invasive and non-invasive pneumococcal disease related health states. We applied a healthcare system perspective with costs (Australian dollars, A)andhealtheffects(measuredinqualityadjustedlife−years,QALYs)attachedtomodelstatesanddiscountedat511,120,000 and prevent 39 hospitalisations and 6 deaths from invasive pneumococcal disease and 180 hospitalisations and 10 deaths from community acquired pneumonia. The PCV13 program had an incremental cost-effectiveness ratio of ∼A88,100perQALYgainedwhencomparedtoano−vaccination,whereasPPV23was∼A297,200 per QALY gained. To fall under a cost-effectiveness threshold of A60,000perQALY,PCV13wouldhavetobepricedbelow∼A46 per dose. The cost-effectiveness of PCV13 in comparison to PPV23 was ∼A35,300perQALYgained.ConclusionIncomparisontono−vaccination,wefoundPCV13useinthoseaged65yearswasunlikelytobecost−effectiveunlessthevaccinepricewasbelowA46 or a longer duration of protection can be established. However, we found that in comparison to the PPV23, vaccination with PCV13 was cost-effective. This partly reflects the poor value for money estimated for PPV23 use in Australia