Introduction: Recurrent, BCG-refractory, or progressive high-grade T1 non-muscle invasive bladder cancer (HGT1) patients are exposed to costly treatments and toxicity from repeated transurethral resections and intravesical treatments. Escalation of therapy culminates in radical cystectomy in up to one-third. High healthcare resource utilization for this group of bladder cancer patients presents a challenging dilemma defined by balancing sufficiently aggressive management with the cost, toxicity, and quality-of-life implications of treatment. Methods: A Markov model was constructed to compare the cost-effectiveness of HGT1 cancers managed initially with intravesical BCG with delayed radical cystectomy for NMIBC progression or recurrence versus immediate radical cystectomy with ileal conduit urinary diversion. The base case was represented by a 70 year old potent man with a new diagnosis of HG T1 bladder cancer, ECOG 0-1 performance status, and renal function acceptable for cisplatin-based chemotherapy. Five-year oncologic outcomes, adverse event rates, and published utility values were extracted from current literature. Drug and procedural costs were calculated from a US Medicare perspective and converted to 2021 US dollars. A willingness-to-pay threshold of $150,000 per quality adjusted life year (QALY) was considered cost-effective. One-way sensitivity analysis was then performed to identify correlates with overall cost and identify break-even points for recurrence and progression risk. Results: The mean five-year costs for initial management of HGT1 were $43,197 (SD $3847) for intravesical BCG and $39,502 (SD $5434) for immediate radical cystectomy. Immediate cystectomy generated a gain of 1.7 QALYs and dominated intravesical BCG, generating an ICER of -$2238/QALY. Costs associated with cystectomy, TURBT, and BCG toxicity had the greatest impact on ICER. One-way sensitivity analysis demonstrated that intravesical BCG became a cost-effective management strategy if the 5-year recurrence rate of HG T1 was less than 56% or the five-year progression rate to MIBC was less than 4%. Conclusions: At current costs, treatment of HG T1 bladder cancer with immediate radical cystectomy achieves better oncologic and quality of life outcomes at lower cost over five years, and therefore is a more cost-effective management strategy than initial treatment with intravesical BCG. SOURCE OF Funding: None