Background Percutaneous laser disc decompression (PLDD) for patients with lumbar disc herniation is believed to be cheaper than surgery. However, cost-effectiveness has never been studied. Materials and Methods A cost utility analysis was performed alongside a randomized controlled trial comparing PLDD and conventional surgery. Patients reported their quality of life using the EuroQol five dimensions questionnaire (EQ-5D), 36-item short form health survey (SF-36 and derived SF-6D) and a visual analogue scale (VAS). Using cost diaries patients reported health care use, non-health care use and hours of absenteeism from work. The 1-year societal costs were compared with 1-year quality adjusted life years (QALYs) based on the United States (US) EQ-5D. Sensitivity analyses were carried out on the use of different utility measures (Netherland (NL) EQ-5D, SF-6D, or VAS) and on the perspective (societal or healthcare). Results On the US EQ-5D, conventional surgery provided a non-significant gain in QALYs of 0.033 (95% confidence interval (CI) -0.026 to 0.093) in the first year. PLDD resulted in significantly lower healthcare costs (difference €1771, 95% CI €303 to €3238) and non-significantly lower societal costs (difference €2379, 95% CI -€2860 to €7618). For low values of the willingness to pay for a QALY, the probability of being cost-effective is in favor of PLDD. For higher values of the willingness to pay, between €30,000 and €70,000, conventional microdiscectomy becomes favorable. Conclusions From a healthcare perspective PLDD, followed by surgery when needed, results in significantly lower 1-year costs than conventional surgery. From a societal perspective PLDD appears to be an economically neutral innovation.