Purpose Recently, a large randomized trial found a survival advantage among patients who received elective neck dissection in conjunction with primary surgery for clinically node-negative oral cavity cancer compared with those receiving primary surgery alone. However, elective neck dissection comes with greater upfront cost and patient morbidity. We present a cost-effectiveness analysis of elective neck dissection for the initial surgical management of early-stage oral cavity cancer. Methods We constructed a Markov model to simulate primary, adjuvant, and salvage therapy; disease recurrence; and survival in patients with T1/T2 clinically node-negative oral cavity squamous cell carcinoma. Transition probabilities were derived from clinical trial data; costs (in 2015 US dollars) and health utilities were estimated from the literature. Incremental cost-effectiveness ratios, expressed as dollar per quality-adjusted life-year (QALY), were calculated with incremental cost-effectiveness ratios less than $100,000/QALY considered cost effective. We conducted one-way and probabilistic sensitivity analyses to examine model uncertainty. Results Our base-case model found that over a lifetime the addition of elective neck dissection to primary surgery reduced overall costs by $6,000 and improved effectiveness by 0.42 QALYs compared with primary surgery alone. The decrease in overall cost despite the added neck dissection was a result of less use of salvage therapy. On one-way sensitivity analysis, the model was most sensitive to assumptions about disease recurrence, survival, and the health utility reduction from a neck dissection. Probabilistic sensitivity analysis found that treatment with elective neck dissection was cost effective 76% of the time at a willingness-to-pay threshold of $100,000/QALY. Conclusion Our study found that the addition of elective neck dissection reduces costs and improves health outcomes, making this a cost-effective treatment strategy for patients with early-stage oral cavity cancer.