Isoniazid chemoprophylaxis is not recommended for all persons infected with tubercle bacilli. Because of the small but significant risk of isoniazid hepatotoxicity, chemoprophylaxis is reserved for only those at the highest risk of tuberculosis activation. To evaluate this policy, we performed a cost-effectiveness analysis of isoniazid chemoprophylaxis for two populations with positive tuberculin skin tests: recent tuberculin converters, who are at high risk for activation, and older tuberculin reactors, who have a low risk for activation and for whom chemoprophylaxis is not now recommended. The cost-effectiveness ratios found were stable, despite wide variations in model assumptions and probability estimates. For high-risk tuberculin reactors, chemoprophylaxis resulted in net medical care monetary savings, extended life expectancy, and fewer fatal illnesses. For low-risk tuberculin reactors, chemoprophylaxis resulted in positive, but small, health effects. Because the cost to gain these positive effects were also small, the resulting cost-effectiveness ratios were reasonable and in the realm of accepted prevention strategies: $12,625 to gain one year of life and $35,011 to avert one death. These findings suggest that the current policy is too restrictive and that many in the large population of low-risk tuberculin reactors should be considered for isoniazid chemoprophylaxis.