Objective: For older people who have had hip fracture surgery, to evaluate the cost-effectiveness of a nurse-led intervention in treating depression compared to treatment as usual (TAU), and to evaluate the cost-effectiveness of a psychological treatment for the prevention of depression. Design: Two linked cost-effectiveness studies for the treatment and prevention of depression after hip surgery, from the perspective of health, social care, voluntary sector agencies and unpaid carers. Setting: Orthopaedic units in Manchester, England. Participants: One hundred and twenty-one patients with Geriatric Depression Scale (GDS) scores greater than 6 were included in the treatment study and 172 patients with GDS scores less than or equal to 6 were enrolled in the prevention study. Interventions: Nurse-led intervention for treating depression versus TAU; and cognitive behaviour therapy (CBT) for preventing depression following surgery for hip fracture. Main outcome measures: Outcomes were changes in HADS-depression scores at 6 weeks. Costs covered treatment and all service impacts. Results: After 6 weeks, there were no significant differences in cost. However, the nurse-led intervention group had a lower mean HADS-depression score compared to TAU. In the prevention study, there were no significant differences in cost and depression score between patients treated with CBT and TAU. Conclusion: The results for this parallel randomized controlled study show that after hip fracture surgery a nurse-led intervention may be a cost-effective option for the treatment of depression in older people with depression. However CBT does not appear to be a cost-effective option for the prevention of depression in this population. (C) 2010 Elsevier B.V. All rights reserved.