ObjectiveTo determine the cost-effectiveness of a smoke-free prison policy in Scotland, through assessments of the trade-offs between costs (healthcare and non-healthcare-related expenditure) and outcomes (health and non-health-related non-monetary consequences) of implementing the policy.DesignA health economic evaluation consisting of three analyses (cost-consequence, cost-effectiveness and cost-utility), from the perspectives of the healthcare payer, prison service, people in custody and operational staff, assessed the trade-offs between costs and outcomes. Costs associated with the implementation of the policy, healthcare resource use and personal spend on nicotine products were considered, alongside health and non-health outcomes. The cost-effectiveness of the policy was evaluated over 12-month and lifetime horizons (short term and long term).SettingScotland’s national prison estate.ParticipantsPeople in custody and operational prison staff.InterventionImplementation of a comprehensive (indoor and outdoor) smoke-free policy.Main outcome measuresConcentration of secondhand smoke, health-related quality of life (health utilities and quality-adjusted life-years (QALY)) and various non-health outcomes (eg, incidents of assaults and fires).ResultsThe short-term analyses suggest cost savings for people in custody and staff, improvements in concentration of secondhand smoke, with no consistent direction of change across other outcomes. The long-term analysis demonstrated that implementing smoke-free policy was cost-effective over a lifetime for people in custody and staff, with approximate cost savings of £28 000 and £450, respectively, and improvement in health-related quality of life of 0.971 QALYs and 0.262, respectively.ConclusionImplementing a smoke-free prison policy is cost-effective over the short term and long term for people in custody and staff.