Context. Homosexual and bisexual me n infected with human immunodeficiency virus (HIV) are at increased risk for human papillomavirus- related anal neoplasia and anal squamous cell carcinoma (SCC). Objective. To estimate the clinical benefits and cost-effectiveness of screening HIV- positive homosexual and bisexual men for anal squamous intraepithelial lesions (ASIL) and anal SCC. Design. Cost-effectiveness analysis performed from a societal perspective that used reference case recommendations from the Panel on Cost-Effectiveness in Health and Medicine. A state-transition Markov model was developed to calculate lifetime costs, life expectancy, and quality-adjusted life expectancy for no screening vs several screening strategies for ASIL and anal SCC using anal Papanicolaou (Pap) testing at different intervals. Values for incidence, progression, and regression of anal neoplasia; efficacy of screening and treatment; natural history of HIV; health-related quality of life; and costs were obtained from the literature. Setting and Participants. Hypothetical cohort of homosexual and bisexual HIV- positive men living in the United States. Main Outcome Measures. Life expectancy, quality-adjusted life expectancy, quality-adjusted years of life saved, lifetime costs, and incremental cost-effectiveness ratio. Results. Screening for ASIL increased quality-adjusted life expectancy at all stages of HIV disease. Screening with anal Pap tests every 2 years, beginning in early HIV disease (CD4 cell count >0.50 x 109/L), resulted in a 2.7-month gain in quality-adjusted life expectancy for an incremental cost- effectiveness ratio of $13 000 per quality-adjusted life year saved. Screening with anal Pap tests yearly provided additional benefit at an incremental cost of $16 600 per quality-adjusted life year saved. If screening was not initiated until later in the course of HIV disease (CD4 cell count <0.50 x 109/L), then yearly Pap test screening was preferred due to the greater amount of prevalent anal disease (cost-effectiveness ratio of less than $25 000 per quality-adjusted life year saved compared with no screening). Screening every 6 months provided little additional benefit over that of yearly screening. Results were most sensitive to the rate of progression of ASIL to anal SCC and the effectiveness of treatment of precancerous lesions. Conclusions. Screening HIV-positive homosexual and bisexual men for ASIL and anal SCC with anal Pap tests offers quality- adjusted life expectancy benefits at a cost comparable with other accepted clinical preventive interventions.