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Introduction: Research evidence has shown that catheter ablation is a safe and superior treatment for atrial fibrillation (AF) compared to medical therapy, but real‐world practice has been slow to adopt an early interventional approach. This study aims to determine the cost effectiveness of catheter ablation compared to medical therapy from the perspective of the United Kingdom. Methods: A patient‐level Markov health‐state transition model was used to conduct a cost‐utility analysis. The population included patients previously treated for AF with medical therapy, including those with heart failure (HF), simulated over a lifetime horizon. Data sources included published literature on utilization and cardiovascular event rates in real world patients, a systematic literature review and meta‐analysis of randomized controlled trials for AF recurrence, and publicly available government data/reports on costs. Results: Catheter ablation resulted in a favorable incremental cost‐effectiveness ratio (ICER) of £8614 per additional quality adjusted life years (QALY) gained when compared to medical therapy. More patients in the medical therapy group failed rhythm control at any point compared to catheter ablation (72% vs. 24%) and at a faster rate (median time to treatment failure: 3.8 vs. 10 years). Additionally, catheter ablation was estimated to be more cost‐effective in patients with AF and HF (ICER = £6438) and remained cost‐effective over all tested time horizons (10, 15, and 20 years), with the ICER ranging from £9047–£15 737 per QALY gained. Conclusion: Catheter ablation is a cost‐effective treatment for atrial fibrillation, compared to medical therapy, from the perspective of the UK National Health Service. [ABSTRACT FROM AUTHOR]