Results show that those who remained in the ADC program (n=114) committed significantly fewer reoffenses and remained law-abiding longer before committing their first reoffense compared with those who did not comply with program conditions (n=195) or those who were processed under conventional sanctions (the control group, n=128). A major cost for the ADC and control groups was imprisonment. The majority of the control group were imprisoned. For the ADC program, imprisonment costs stemmed from jail time as a sanction for noncompliance with program conditions. Despite some disappointment that the ADC program was not more cost-effective for the 23-month period of the evaluation, the New South Wales Government agreed to extend the ADC program for an additional 2 years in order to determine whether operating costs could be reduced without any adverse impact on the ADC's effectiveness. The New South Wales ADC was the first drug court program established in Australia. Its goal was to decrease criminal activity resulting from drug dependency by diverting offenders into programs tailored to reduce or eliminate drug dependence by using a combination of drug treatment and close monitoring of treatment progress and compliance by the ADC judge. Failure to comply with treatment and supervision conditions could result in sanctions, including imprisonment. The evaluation, which examined ADC operations and impact from its start in February 1999 through December 2000, measured effectiveness by time to first offense during the followup period and offending frequency per unit time compared to the control group. In determining cost, the evaluation identified the activities to be cost-effective with the resources used in those activities, and the costs attached to those resources. 11 tables, 4 figures, and 19 references