Background: Tax rises to reduce cigarette consumption are a major feature of European tobacco control policies. In many countries, hand-rolling tobacco is much cheaper than manufactured cigarettes. We investigated whether changes In price differentials between manufactured and hand-rolled cigarettes influenced cigarette consumption in The Netherlands. Method: We developed regression models to explain changes in the consumption of the two cigarette types. Price elasticities, the percentage changes in consumption for a 1% change in price, are calculated from Netherlands data for 1970–1980 and 1985–1995. Results: The ratio of manufactured to hand-rolled cigarette prices changed little during 1970–1980 but varied subsequently. On multivariate analysis, manufactured cigarette consumption in 1970–1980 decreased as its price rose (elasticity=−0.74). In 1985–1995, manufactured cigarette consumption fell with increases in both its own price (elasticity = −0.54) and in the price differential between manufactured and hand-rolled cigarettes (elasticity = −0.60). During 1985–1995, roll-your-own consumption fell as the price ratio of manufactured to hand-rolled cigarettes fell (elasticity = +1.0). Conclusion: When the price rise for hand-rolling tobacco is greater than the price rise for manufactured cigarettes, the fall in manufactured cigarette consumption is accompanied by a fall in roll-your-own use. Cigarette smokers are deterred from switching to hand-rolled cigarettes Instead of stopping smoking. This increases the health benefits of raising taxes on manufactured cigarettes, discourages the use of even more harmful forms of tobacco and may reduce inequalities in health.