Because of the prevalence of pneumococcal pneumonia and the substantial morbidity and mortality associated with many pneumococcal infections, considerable efforts have been made in disease prevention, using a polyvalent polysaccharide pneumococcal vaccine. Although the WHO has endorsed a policy of universal vaccination of all elderly people, the economic aspects of such a policy have not been determined. Using a decision tree framework, this paper examines the cost-effectiveness of various strategies of pneumococcal vaccination for the elderly in The Netherlands. For various age categories, the economic attractiveness of the vaccination of all individuals as well as the vaccination of only those individuals with a specific disease has been calculated. We conclude that, allowing for some uncertainty regarding key variables such as the vaccine efficacy and the hospital admission rate, the vaccination of all individuals above the age of 65 years is comparable in terms of cost-effectiveness to many existing health care interventions. The vaccination of individuals above the age of 55 years with chronic lung disease or chronic heart disease is similarly attractive from an economic point of view, as is the vaccination of individuals above the age of 65 years with diabetes mellitus.