Abstract Background The two most common interventions for Posttraumatic Stress Disorder (PTSD) are pharmacological treatment with SSRIs such as paroxetine and psychological treatment such as Trauma-Focused Cognitive Behavioral Therapy (TF-CBT). International guidelines recommend trauma-focused psychological interventions for all PTSD patients as first-line treatment (NICE). However, no clear-cut evidence is available to support this recommendation. Methods/design In order to compare pharmacological treatment (paroxetine) and psychological treatment (TF-CBT) in (cost-) effectiveness on the short and the long term, we will randomize 90 patients with chronic PTSD to either paroxetine (24 weeks) or TF-CBT (10–12 weeks). We will assess symptom severity and costs before and after the intervention with the Clinician Administered PTSD Scale (CAPS), the Clinical Global Impression Scale (CGI) and the Trimbos/iMTA questionnaire for Costs associated with Psychiatric Illness (TiC-P). Discussion This study is unique for its direct comparison of the most commonly used psychological intervention (TF-CBT) and pharmacological intervention (paroxetine) on (cost-) effectiveness on the short and the long term. The anticipated results will provide relevant evidence concerning long-term effects and relapse rates and will be beneficial in reducing societal costs. It may also provide information on who may benefit most from which type of intervention. Some methodological issues will be discussed. Trial Registration Dutch Trial registration: NTR2235