Core decompression is widely used to treat the early stages of osteonecrosis of the hip. The purpose of this analysis is to assist orthopedic surgeons in judging whether currently available data support the use of core decompression as cost-effective. A decision model was created for the treatment of osteonecrosis of the femoral head. Literature review was used to identify possible outcomes and their probability after initial treatment with either observation or core decompression. This model demonstrates core decompression must delay the need for total hip arthroplasty for a minimum of 5 years to maintain an incremental cost-effectiveness ratio lower than 50,000 dollars per quality-adjusted life year gained. Treatment options with ratios higher than 50,000 dollars per quality-adjusted life year are generally considered to have limited cost-effectiveness. This study demonstrates that core decompression has the potential to be a highly cost-effective alternative if it is leads to a delay in the need for total hip arthroplasty of 5 years or longer.