Purpose. To investigate the cost utility of targeted pharmacogenetic testing for the UGT1A1 allele in metastatic colorectal cancer patients prior to chemotherapy with irinotecan. The FDA currently recommends irinotecan dose reduction in patients homozygous for the UGT1A1*28 variant allele to reduce the incidence of serious adverse drug effects (SAEs: e.g., severe neutropenia or diarrhea) associated with slower irinotecan metabolism in these patients. Methods. We developed a decision analytic model from the health system perspective comparing usual care to irinotecan dose reduction based on genotype. In the base case, we assumed equivalent efficacy of irinotecan following dose reduction (assuming homozygotes have sufficient irinotecan exposure at lower doses), a quality-of-life decrement from SAEs lasting 1 week, and a mortality risk from an SAE. Data were obtained from the clinical and scientific literature, the FDA, and Medicare reimbursement rates and drug acquisition prices. We performed 1-way and probabilistic sensitivity analyses primarily on the efficacy of dose reduction, prevalence of homozygosity, and test cost. We also considered the impact of including patient time costs. Results. The base case shows that testing all patients and reducing irinotecan dose for homozygotes costs $110/patient less than usual care and increases quality-adjusted life expectancy by 0.1 day. Reduced-dose efficacy among homozygotes must be at least 99.5% of full-dose efficacy for testing to remain the preferred strategy. Testing no longer dominates usual care when homozygosity prevalence is <7.6% (vs. 11% in base case) or test cost is >$460 (vs. $350 in base case). At a willingness-to-pay threshold of $150,000/QALY, testing is preferred to usual care when homozygozity prevalence is >6.4% or test cost is <$00. In probabilistic sensitivity analysis, testing dominates usual care in 50.2% of simulations and is below the willingness-to-pay threshold in 58.5% of simulations. Incorporating patient time costs does not change the optimal strategy. Conclusions. Pharmacogenetic testing to guide irinotecan dosing is cost-effective if treatment efficacy is not impaired following a dose reduction in UGT1A1*28 homozygotes. Further research is needed to evaluate efficacy equivalence and confirm lower SAE rates after dose reduction. Testing is less attractive in low-prevalence populations, which may raise ethical concerns because homozygosity prevalence varies by race. Future work should evaluate other predictors of homozygosity (e.g., elevated serum bilirubin) to identify higher prevalence populations for testing.