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Introduction Cigarette smoking causes many chronic diseases that are costly and result in frequent hospitalisation. Hospital-initiated smoking cessation interventions increase the likelihood that patients will become smoke-free. We modelled the cost-effectiveness of the Ottawa Model for Smoking Cessation (OMSC), an intervention that includes in-hospital counselling, pharmacotherapy and posthospital follow-up, compared to usual care among smokers hospitalised with acute myocardial infarction (AMI), unstable angina (UA), heart failure (HF), and chronic obstructive pulmonary disease (COPD). Methods We completed a cost-effectiveness analysis based on a decision-analytic model to assess smokers hospitalised in Ontario, Canada for AMI, UA, HF, and COPD, their risk of continuing to smoke and the effects of quitting on re-hospitalisation and mortality over a 1-year period. We calculated short-term and long-term cost-effectiveness ratios. Our primary outcome was 1-year cost per quality-adjusted life year (QALY) gained. Results From the hospital payer's perspective, delivery of the OMSC can be considered cost effective with 1-year cost per QALY gained of $C1386, and lifetime cost per QALY gained of $C68. In the first year, we calculated that provision of the OMSC to 15 326 smokers would generate 4689 quitters, and would prevent 116 rehospitalisations, 923 hospital days, and 119 deaths. Results were robust within numerous sensitivity analyses. Discussion The OMSC appears to be cost-effective from the hospital payer perspective. Important consideration is the relatively low intervention cost compared to the reduction in costs related to readmissions for illnesses associated with continued smoking. [ABSTRACT FROM AUTHOR]