INTRODUCTION AND HYPOTHESIS: Over half of all fractures among post-menopausal women occur in those who do not have osteoporosis by bone density criteria. Measurement of bone turnover may cost-effectively identify a subset of women with T-score >-2.5 for whom anti-resorptive drug therapy is cost-effective. METHODS: Using a Markov model, we estimated the cost per quality adjusted life year (QALY) for five years of oral bisphosphonate compared to no drug therapy for osteopenic post-menopausal women aged 60 to 80 years with a high (top quartile) or low (bottom 3 quartiles) level of a bone turnover marker. RESULTS: For women with high bone turnover, the cost per QALY gained with alendronate compared to no drug therapy among women aged 70 years with T-scores of -2.0 or -1.5 were $58,000 and $80,000 (U.S. 2004 dollars), respectively. If bisphosphonates therapy also reduced the risk of non-vertebral fractures by 20% among osteopenic women with high bone turnover, then the costs per QALY gained were $34,000 and $50,000 for women age 70 with high bone turnover and T-scores of -2.0 and -1.5, respectively. CONCLUSION: Measurement of bone turnover markers has the potential to identify a subset of post-menopausal women without osteoporosis by bone density criteria for whom bisphosphonate therapy to prevent fracture is cost-effective. The size of that subset highly depends on the assumed efficacy of bisphosphonates for fracture risk reduction among women with both a T-score >-2.5 and high bone turnover and the cost of bisphosphonate treatment.