OBJECTIVES: To assess cost-effectiveness and cost utility of telerehabilitation (TR) versus standard rehabilitation (SR) after total knee replacement (TKR). DESIGN: Markov decision modelling of cost-effectiveness and cost-utility analysis based on patient-level and secondary data sources employing Italian National Health Service (NHS; Ita-NHS) and Society perspectives. SETTING: Primary care units (PCUs) in Italy. PARTICIPANTS: Patients discharged after TKR. INTERVENTIONS: Mixed SR-TR service (10 face-to-face sessions and 10 telesessions) versus SR (20 face-to-face sessions) PRIMARY AND SECONDARY OUTCOME MEASURES: The incremental cost per additional knee flexion range of motion (ROM) and per QALY gained by SR-TR compared with SR. Second, we considered the probability of being cost-effective and the probability of being more effective and less expensive. RESULTS: TR appears to be the cost-effective in the base case and in all of the considered scenarios, but is no longer more effective and less expensive if transportation costs are excluded. Comparing SR-TR with SR, the incremental cost-effectiveness ratio (ICER) adopting the Ita-NHS perspective for the base case was -€117/ROM gained. The cost-effectiveness probability for SR-TR was 0.98 (ceiling ratio: €50/ROM), while the joint probability of being more effective and less expensive was 0.87. Assuming that TR would increase health-related quality of life (HRQOL) utilities by 2.5%, the ICER adopting Ita-NHS perspective is -€960/QALY (cost-effectiveness probability: 1; ceiling ratio: €30 000/QALY). All the performed sensitivity analyses did not change the conclusions, but if transportation costs were excluded, the probability for SR-TR of being more clinically effective and less expensive reduced to 0.56. CONCLUSIONS: The analysis suggested SR-TR to be cost-effective, even less expensive and more effective if the PCUs provide ambulance transportations. However, the uncertainty related to TR costs, HRQOL and long-term clinical outcomes raises important topics for future research, which should be addressed to confirm our estimates. TRIAL REGISTRATION NUMBER: ISRCTN45837371.