Men treated for prostate cancer with curative intent face a recurrence rate of up to 53% at 10 years. ⁶⁸Ga-PSMA imaging is a new technique that can more accurately stage cancer recurrences and facilitate personalised treatment. We evaluated the cost-effectiveness of ⁶⁸Ga-PSMA PET/MRI for staging men with prostate cancer biochemical recurrence. A cost-effectiveness analysis using a decision-analytic model with Markov chains was constructed. ⁶⁸Ga-PSMA PET/MRI was compared with usual care in staging of men with suspected prostate cancer recurrence. Men with biochemical recurrence from a study in Brisbane, Australia (n = 30) provided key estimates for the model. The primary outcomes were health system costs and years of life (survival) over 10 years. Deterministic and probabilistic sensitivity analyses were undertaken to address uncertainty in model estimates. On average, a strategy of ⁶⁸Ga-PSMA was expected to cost AU$56 961(US$39 426) and produce 7.48 life years compared with AU$64 499 (US$44 667) and 7.41 life years in usual care. Therefore, ⁶⁸Ga-PSMA was potentially cost saving (− AU$7 592 95% UI − $24 846, $7 825) (− US$5 258) and slightly more effective 0.07 life years (95% UI − 0.01, 0.16). The likelihood that ⁶⁸Ga-PSMA strategy was cost-effective at acceptable thresholds was 87%. The findings were sensitive to the lesion detection rate of the ⁶⁸Ga-PSMA strategy (52–75%) and the cost of follow up in usual care (AU$1 947 to $2 635). In this exploratory economic evaluation, using ⁶⁸Ga-PSMA PET/MRI to detect prostate cancer recurrence appears to be cost-effective relative to usual care.