Based on the German Hepatitis C Model (GEHMO) we developed a Hepatitis C Policy Model and applied it to the heterogeneous German hepatitis C population within the German health care context. We used Markov cohort simulation to predict absolute clinical and economic outcomes for a 20-year time horizon. For the cost-effectiveness analysis, a lifelong time horizon was used. Four different strategies were compared: (1) no antiviral treatment, (2) interferon monotherapy, (3) combination therapy with interferon plus ribavirin, and (4) combination therapy with pegylated interferon plus ribavirin. Based on our model, antiviral therapy with pegylated interferon and ribavirin could prevent about 17,000 cases of cirrhosis, 580 liver transplants, and 7,600 HCV-related deaths and is expected to save about 53,000 life years at total costs of 1.3 billion Euros within the next 20 years. Pegylated interferon plus ribavirin was the most effective treatment with an incremental cost-utility ratio of 23,000 Euros per quality-adjusted life year saved.