Although tuberculosis is a major cause of morbidity and mortality worldwide, available funding falls far short of that required for effective control. Economic and spillover consequences of investments in the treatment of tuberculosis are unclear, particularly when steep gradients in the disease and response are linked by population movements, such as that between Papua New Guinea (PNG) and the Australian cross-border region. Objective: This paper undertakes an economic evaluation of Australian support for the expansion of basic directly observed treatment, or short-course DOTS, in the PNG border area of the South Fly from the current level of 14 per cent coverage. Methods: Both cost-utility and cost-benefit analysis is applied to models that allow for population movement across regions with different characteristics of tuberculosis burden, transmission and access to treatment. Data sources: Cost-benefit data are drawn primarily from estimates published by the WHO, and disease transmission data from a previously published model. Results: Investing $16 million to increase basic DOTS coverage in the South Fly generates a net present value of roughly $74 million for Australia (discounted 2005 dollars). The cost per DALY averted and QALY saved for PNG is $7 and $4.6, respectively. Conclusions: Where regions with major disparities in tuberculosis burden and health system resourcing are connected through population movements, investments in tuberculosis control is of mutual benefit, resulting in net health and economic gains on both sides of the border. These findings are likely to inform the case for appropriate investment in tuberculosis control globally.