OBJECTIVE To compare the live-birth rate and cost per live birth of intrauterine insemination (IUI) and in vitro fertilization (IVF) in couples with unexplained or male factor infertility. DESIGN Randomized, three-arm, controlled trial. Allocation was by computer-generated randomization list, stratified for prognostic factors, using scaled envelopes. SETTING University hospital in the Netherlands. SUBJECTS 77 couples with mild/moderate male factor infertility of > 1 year and 181 couples with unexplained infertility of > 3 years duration. Mean female age was 32 years, mean duration of infertility was 4.2 years and 87% of couples had primary infertility. INTERVENTION 86 couples were randomized to undergo IUI in a natural cycle after detection of the luteinizing hormone (LH) surge using a urine kit, and 85 to undergo IUI after controlled ovarian hyperstimulation (COH) with low-dose urinary follicle stimulating hormone (FSH). 87 couples underwent IVF with pituitary desensitization and ovarian stimulation with gonadotropins. All couples were allowed up to six cycles of the allocated treatment. MAIN OUTCOME MEASURES Live birth per cycle and per couple, cost per livebirth. MAIN RESULTS Six couples in the IUI group and two each in the IUI-COH and IVF groups withdrew before the first treatment cycle. In addition, 15, 16 and 37%, respectively, discontinued treatment before completing six cycles. Withdrawal was due to spontaneous pregnancy in 18 couples. The live-birth rate per couple that started treatment was 25/80 (31%) in the IUI group, 31/83 (37%) in the IUI-COH group, and 33/85 (39%) in the IVF group (all pairwise comparisons NS*). The respective live-birth rates per started cycle were 7.4, 8.7 and 12.2% (P = 0.52 IUI vs IUI-COH, P = 0.04 IUI vs IVF, P = 0.15 IUI-COH vs IVF)*. The average cost per live birth in Dutch guilders (1 NLG = S0.48 US) was NLG 8423 with IUI, NLG 10,661 with IUI-COH and NLG 27,409 with IVF. This cost increased with female age and was slightly higher for couples with idiopathic infertility than for those with male infertility. CONCLUSION For couples with unexplained or male factor infertility, the live-birth rates per couple were not significantly different after treatment with intrauterine insemination (with or without ovarian stimulation) or in vitro fertilization. Thus, IUI was the most cost-effective treatment, with the cost per live birth with IVF being approximately 3-fold higher.