Over the past two decades, the criminal justice population in the US has grown by over 200%, most of this due to an increase in drug-involved offenders. Although there is good evidence that prison-based substance abuse treatment programs can be effective in reducing rearrest, few cost-effectiveness studies have been conducted. Using data from the Connecticut Department of Correction and the Connecticut Department of Mental Health and Addiction Services (DMHAS), we compared the cost-effectiveness of four tiers (levels) of substance abuse treatment programs for a sample of 831 offenders who were released during FY1996-FY1997. Effectiveness, measured by reductions in the likelihood of rearrest within six months, one year and 18 months post-release, was compared for inmates who had received treatment while incarcerated (n = 358) and those who had not (n = 473). At all intervals, offenders who attended any of the higher tier programs (two, three and four) had significantly lower rates of rearrest when compared to offenders who attended Tier One only or who had attended no tier programs, even after controlling for background characteristics that may have differentiated the two groups. The benefits to the State of Connecticut correctional system alone, measured in terms of the costs of avoided re-incarcerations, were from 1.8 to 5.7 times the cost of implementing the programs, ranging from $20,098 (Tier Four) to $37,605 (Tier Two). Since society receives a favorable return on its investment in prison-based treatment programs, we should find ways to ensure that more drug-involved inmates receive treatment. (Contains 1 figure and 7 tables.)