OBJECTIVE: To estimate the health and economic impact of feeding partially hydrolyzed formula-whey (PHF-W) instead of standard cow's milk formula (CMF) for the first 4 months of life among US infants at high risk for developing atopic dermatitis (AD). STUDY DESIGN: A Markov model was developed integrating published data, a survey of US pediatricians, costing sources and market data, and expert opinion. Key modeled outcomes included reduction in AD risk, time spent post AD diagnosis, days without AD flare, and AD-related costs. Costs and clinical consequences were discounted at 3% annually. RESULTS: An estimated absolute 14-percentage point reduction in AD risk was calculated with the use of PHF-W compared with CMF (95% CI for difference, 3%-22%). Relative to CMF, PHF-W decreased the time spent post-AD diagnosis by 8.3 months (95% CI, 2.78-13.31) per child and increased days without AD flare by 39 days (95% CI, 13-63) per child. The AD-related, 6-year total cost estimate was $495 less (95% CI, -$813 to -$157) per child with PHF-W ($724 per child; 95% CI, $385-$1269) compared with CMF ($1219 per child; 95% CI, $741-$1824). CONCLUSION: Utilization of PHF-W in place of CMF as the initial infant formula administered to high-risk US infants not exclusively breastfed during the first 4 months of life may reduce the incidence and economic burden of AD. Broad implementation of this strategy could result in a minimum savings of $355 million per year to society.