Lumbar spinal stenosis (LSS) and sagittal imbalance are relatively common in elderly patients. Although the goals of surgery include both functional and radiological improvements, the criteria of correction may be too strict for elderly patients. If the main symptom of patients is not forward-stooping but neurogenic claudication or pain, lumbar decompression without adding fusion procedure may be a surgical option. We performed cost-utility analysis between lumbar decompression and lumbar fusion surgery for those patients. Elderly patients (age > 60 years) who underwent 1-2 levels lumbar fusion surgery (F-group, n = 31) or decompression surgery (D-group, n = 40) for LSS with sagittal imbalance (C7 sagittal vertical axis, C7-SVA > 40 mm) with follow-up ≥ 2 years were included. Clinical outcomes (Euro-Quality of Life-5 Dimensions, EQ-5D; Oswestry Disability Index, ODI; numerical rating score of pain on the back and leg, NRS-B and NRS-L) and radiological parameters (C7-SVA; lumbar lordosis, LL; the difference between pelvic incidence and lumbar lordosis, PI-LL; pelvic tilt, PT) were assessed. The quality-adjusted life year (QALY) and incremental cost-effective ratio (ICER) were calculated from a utility score of EQ-5D. Postoperatively, both groups attained clinical and radiological improvement in all parameters, but NRS-L was more improved in the F-group (p = 0.048). ICER of F-group over D-group was 49,833 US dollars/QALY. Cost-effective lumbar decompression may be a recommendable surgical option for certain elderly patients, despite less improvement of leg pain than with fusion surgery.