This study evaluated the cost effectiveness of using Stockholm 3 (STHLM3) testing compared to the prostate-specific antigen (PSA) test in the diagnostic pathway for prostate cancer.We created a decision tree model for PSA (current standard) and STHLM3 (new alternative). Cost effectiveness was evaluated in a hypothetical cohort of male individuals aged 50-69 years. The study applied a Danish hospital perspective with a time frame restricted to the prostate cancer diagnostic pathway, beginning with the initial PSA/STHLM3 test, and ending with biopsy and histopathological diagnosis. Estimated values from the decision-analytical model were used to calculate the incremental cost-effectiveness ratio. Deterministic and probabilistic sensitivity analyses were conducted to test the robustness of the base-case analysis.The model-based analysis revealed that STHLM3 testing was more effective than the PSA, but also more costly, with an incremental cost-effectiveness ratio of €511.7 (95% credible interval, 359.9-674.3) for each additional correctly classified individual. In the deterministic sensitivity analysis, variations in the cost of STHLM3 had the greatest influence on the incremental cost-effectiveness ratio. In the probabilistic sensitivity analysis, all iterations were positioned in the north-east quadrant of the incremental cost-effectiveness scatterplot. At a willingness to pay of €700 for an additional correctly classified individual, STHLM3 had a 100% probability of being cost effective.Compared to the PSA test as the initial testing modality in the prostate cancer diagnostic workup, STHLM3 testing showed improved incremental effectiveness, however, at additional costs. The results were sensitive to the cost of the STHLM3 test; therefore, a lower cost of the STHLM3 test would improve its cost effectiveness compared with PSA tests.