Abstract Background Within the context of increasing antimalarial costs and or decreasing malaria transmission, the importance of limiting antimalarial treatment to only those confirmed as having malaria parasites becomes paramount. This motivates for this assessment of the cost-effectiveness of routine use of rapid diagnostic tests (RDTs) as an integral part of deploying artemisinin-based combination therapies (ACTs). Methods The costs and cost-effectiveness of using RDTs to limit the use of ACTs to those who actually have Plasmodium falciparum parasitaemia in two districts in southern Mozambique were assessed. To evaluate the potential impact of introducing definitive diagnosis using RDTs (costing 0.95),fivescenarioswereconsidered,assumingthattheuseofdefinitivediagnosiswouldfindthatbetween251.77 per adult treatment and artemether-lumefantrine (AL) costing 2.40peradulttreatment,aswellastheoptionofrestrictingRDTusetoonlythoseolderthansixyears.SensitivityanalysesconsideredlowercostACTsandRDTsanddifferentpopulationagedistributions.ResultsComparedtotreatingpatientsonthebasisofclinicaldiagnosis,theuseofRDTsinallclinicallydiagnosedmalariacasesresultsincostsavingsonlywhen292.12. When more than 29% of clinically diagnosed cases are malaria test positive, the incremental cost per malaria positive patient treated is less than US1.WhenrelativelylessexpensiveACTsareintroduced(e.g.currentWHOpreferentialpriceforALof1.44 per adult treatment), the RDT price to the healthcare provider should be $0.65 or lower for RDTs to be cost saving in populations with between 30 and 52% of clinically diagnosed malaria cases being malaria test positive. Conclusion While the use of RDTs in all suspected cases has been shown to be cost-saving when parasite prevalence among clinically diagnosed malaria cases is low to moderate, findings show that targeting RDTs at the group older than six years and treating children less than six years on the basis of clinical diagnosis is even more cost-saving. In semi-immune populations, young children carry the highest risk of severe malaria and many healthcare providers would find it harder to deny antimalarials to those who test negative in this age group.</p