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Objectives: This paper examines the cost effectiveness of the compulsory bicycle helmet wearing law (HWL) introduced in New Zealand on 1 January 1994. The societal perspective of costs is used for the purchase of helmets and the value of injuries averted. This is augmented with healthcare costs averted from reduced head injuries. Methods: Three age groups were examined: cyclists aged 5-12 years, 13-18 years, and ≥ 19 years. The number of head and non-head injuries averted were obtained from epidemiological studies. Estimates of the numbers of cyclists and the costs of helmets are used to derive the total spending on new bicycle helmets. Healthcare costs were obtained from national hospitalisation database, and the value of injuries averted was obtained directly from a willingness-to-pay survey undertaken by the Land Transport Safety Authority. Cost effectiveness ratios, benefit:cost ratios, and the value of net benefits were estimated. Results: The net benefit (benefit:cost ratios) of the HWL for the 5-12, 13-18, and ≥19 year age groups was $0.3m (2.6), -$0.2m (0.8), and -$1.5m (0.7) (in NZ $, 2000 prices; NZ $1.00 = US $0.47 = UK £0.31 approx). These results were most sensitive to the cost and life of helmets, helmet wearing rates before the HWL, and the effectiveness of helmets in preventing head injuries. Conclusions: The HWL was cost saving in the youngest age group but large costs from the law were imposed on adult (≥ 19 years) cyclists. [ABSTRACT FROM AUTHOR]