Recent multi-centre trials showed that dihydroartemisinin-piperaquine (DP) was as efficacious and safe as artemether-lumefantrine (AL) for treatment of young children with uncomplicated P. falciparum malaria across diverse transmission settings in Africa. Longitudinal follow-up of patients in these trials supported previous findings that DP had a longer post-treatment prophylactic effect than AL, reducing the risk of reinfection and conferring additional health benefits to patients, particularly in areas with moderate to high malaria transmission. We developed a Markov model to assess the cost-effectiveness of DP versus AL for first-line treatment of uncomplicated malaria in young children from the provider perspective, taking into consideration the post-treatment prophylactic effects of the drugs as reported by a recent multi-centre trial in Africa and using the maximum manufacturer drug prices for artemisinin-based combination therapies set by the Global Fund in 2013. We estimated the price per course of treatment threshold above which DP would cease to be a cost-saving alternative to AL as a first-line antimalarial drug. First-line treatment with DP compared to AL averted 0.03 DALYs (95% CI: 0.006-0.07) and 0.001 deaths (95% CI: 0.00-0.002) and saved $0.96 (95% CI: 0.33-2.46) per child over one year. The results of the threshold analysis showed that DP remained cost-saving over AL for any DP cost below $1.23 per course of treatment. DP is superior to AL from both the clinical and economic perspectives for treatment of uncomplicated P. falciparum malaria in young children. A paediatric dispersible formulation of DP is under development and should facilitate a targeted deployment of this antimalarial drug. The use of DP as first-line antimalarial drug in paediatric malaria patients in moderate to high transmission areas of Africa merits serious consideration by health policymakers.