BACKGROUND: Substantial physician workload and high costs are associated with the treatment of dyspepsia in primary health care. Despite the availability of consensus statements and guidelines, the most cost-effective empirical strategy for initial management of the condition remains to be determined. We compared step-up and step-down treatment strategies for initial management of patients with new onset dyspepsia in primary care. METHODS: Patients aged 18 years and older who consulted with their family doctor for new onset dyspepsia in the Netherlands were eligible for enrolment in this double-blind, randomised controlled trial. Between October, 2003, and January, 2006, 664 patients were randomly assigned to receive stepwise treatment with antacid, H(2)-receptor antagonist, and proton pump inhibitor (step-up; n=341), or these drugs in the reverse order (step-down; n=323), by use of a computer-generated sequence with blocks of six. Each step lasted 4 weeks and treatment only continued with the next step if symptoms persisted or relapsed within 4 weeks. Primary outcomes were symptom relief and cost-effectiveness of initial management at 6 months. Analysis was by intention to treat (ITT); the ITT population consisted of all patients with data for the primary outcome at 6 months. This trial is registered with ClinicalTrials.gov, number NCT00247715. FINDINGS: 332 patients in the step-up, and 313 in the step-down group reached an endpoint with sufficient data for evaluation; the main reason for dropout was loss to follow-up. Treatment success after 6 months was achieved in 238 (72%) patients in the step-up group and 219 (70%) patients in the step-down group (odds ratio 0.92, 95% CI 0.7-1.3). The average medical costs were lower for patients in the step-up group than for those in the step-down group (euro228 vs euro245; p=0.0008), which was mainly because of costs of medication. One or more adverse drug events were reported by 94 (28%) patients in the step-up and 93 (29%) patients in the step-down group. All were minor events, including (other) dyspeptic symptoms, diarrhoea, constipation, and bad/dry taste. INTERPRETATION: Although treatment success with either step-up or step-down treatment is similar, the step-up strategy is more cost effective at 6 months for initial treatment of patients with new onset dyspeptic symptoms in primary care.