PURPOSE: To project the potential impact of pandemic influenza mitigation strategies on health outcome, cost, and cost-effectiveness from a societal perspective. METHODS: We use a stochastic agent-based model to simulate the impact of pandemic influenza on a typical American community of 1.6 million. We compare 16 strategies to no intervention, focusing on targeted antiviral prophylaxis (TAP) with oseltamivir (treatment of identified index cases and prophylaxis of exposed people in the key mixing groups of the index case) alone and in combination with school closure. We assume three levels of antiviral stockpile would be available: 25% and 50% of the population, and unlimited. We also consider pre-vaccination of 70% of the population. We use the human capital approach to estimate productivity loss. Outcomes include number of cases, deaths, QALYs, direct and indirect costs, and incremental cost-effectiveness ratios (ICERs) expressed as costs per QALY gained. RESULTS: In the absence of intervention, we predict a 50% attack rate with an economic impact of $187 per capita. TAP+school closure and pre- vaccination+school closure (preventing 94-96% of cases at $2,730 per capita) are comparable in terms of QALY gain and total costs. The ICER compared to TAP alone (the most effective single strategy) is about $50,500/QALY for either strategy. TAP alone (prophylaxis of 60% of close contacts of index cases) effectively prevents 54% of cases at a cost of $120 per capita. If vaccine is available and administered before the onset of the pandemic, then pre-vaccinating 70% of the population with a partially effective vaccine prevents 48% of cases and is the least costly alternative ($99 per capita). Sensitivity analysis on key variables does not change the ranking of strategies but shows that the basic reproductive number has the greatest impact on QALYs and hence ICERs. CONCLUSIONS: All interventions reduce the illness attack rate, morbidity and mortality. Many interventions are also cost-saving compared to no intervention. Targeted antiviral prophylaxis is an effective and cost-saving measure for mitigating pandemic influenza. Adding school closure provides greater benefit and is likely to be an attractive strategy if transmission and mortality is high.