This study assessed the cost-effectiveness of adding the community-based management of severe acute malnutrition (CMAM) to a community-based health and nutrition programme delivered by community health workers (CHWs) in southern Bangladesh. The cost-effectiveness of this model of treatment for severe acute malnutrition (SAM) was compared with the cost-effectiveness of the 'standard of care' for SAM (i.e. inpatient treatment), augmented with community surveillance by CHWs to detect cases, in a neighbouring area. An activity-based cost model was used, and a societal perspective taken, to include all costs incurred in the programme by providers and participants for the management of SAM in both areas. Cost data were coupled with programme effectiveness data. The community-based strategy cost US$26 per disability-adjusted life year (DALY) averted, compared with US$1344 per DALY averted for inpatient treatment. The average cost to participant households for their child to recover from SAM in community treatment was one-sixth that of inpatient treatment. These results suggest that this model of treatment for SAM is highly cost-effective and that CHWs, given adequate supervision and training, can be employed effectively to expand access to treatment for SAM in Bangladesh.