To test the cost-effectiveness of training traditional birth attendants (TBAs) to recognize postpartum hemorrhage (PPH) and administer a rectal dose of misoprostol in areas with low access to modern delivery facilities. A cost-effectiveness analysis, modeling two hypothetical cohorts of 10,000 women each giving birth with TBAs: one under standard treatment (TBA referral to hospital after blood loss >or=500 ml), and one attended by TBAs trained to recognize PPH and to administer 1000 microg of misoprostol at blood loss >or=500 ml. The misoprostol strategy could prevent 1647 cases of severe PPH (range: 810-2920) and save $115,335 in costs of referral, IV therapy and transfusions (range: $13,991-$1,563,593) per 10,000 births. By preventing severe disease and saving money, it dominates the standard approach. Training TBAs to administer misoprostol to treat PPH has the potential to both save money and improve the health of mothers in low-resource settings.