To evaluate the costs and benefits of neonatal screening for phenylketonuria (PKU) and congenital hypothyroidism (CH). Neonatal screening for PKU and CH is common throughout the developed world. It represents a model of preventive care in that the screening procedure is simple and intellectual disability is otherwise irreversible. Changes in treatment and care, and in particular the advent of maternal PKU, require regular evaluation of a programme that also impacts on a large healthy population.Method: Costs of screening were based on the programme provided within Western Australia. Costs averted were derived using patterns of care currently adopted in Western Australia and applied according to historical patterns of intellectual disability for each condition.Results: A net saving of $A2.9 million is attributable to the programme annually. The economic benefits derive from the prevention of intellectual disability which otherwise incurs costs throughout the life of the affected individual. Maternal PKU represented a minor proportion of overall costs. Sensitivity analysis showed that the cost savings were robust, given changes in the levels of intellectual disability, but varied according to the discount rate. The result of a net saving was evident under all assumptions.Conclusion: Neonatal screening for PKU and CH is a cost saving use of resources and the emergence of maternal PKU has not had a significant effect on the economic outcomes.