Background Epileptic encephalopathies are a devastating group of neurological conditions in which etiological diagnosis can alter management and clinical outcome. Exome sequencing and gene panel testing can improve diagnostic yield but there is no cost‐effectiveness analysis of their use or consensus on how to best integrate these tests into clinical diagnostic pathways. Methods We conducted a retrospective cost‐effectiveness study comparing trio exome sequencing with a standard diagnostic approach, for a well‐phenotyped cohort of 32 patients with epileptic encephalopathy, who remained undiagnosed after “first‐tier” testing. Sensitivity analysis was included with a range of commercial exome and multigene panels. Results The diagnostic yield was higher for the exome sequencing (16/32; 50%) than the standard arm (2/32; 6.2%). The trio exome sequencing pathway was cost‐effective compared to the standard diagnostic pathway with a cost saving of AU 5,236(95%confidenceintervals 2,482; 9,784)peradditionaldiagnosis;thestandardpathwaycostapproximately10timesmoreperdiagnosis.Sensitivityanalysisdemonstratedthatthemajorityofcommercialexomesequencingandmultigenepanelsstudiedwerealsocost‐effective.Theclinicalutilityofalldiagnoseswasreported.ConclusionOurstudysupportstheintegrationofexomesequencingandgenepaneltestingintothediagnosticpathwayforepilepticencephalopathy,bothintermsofcosteffectivenessandclinicalutility.Weproposeadiagnosticpathwaythatintegratesinitialrapidscreeningfortreatablecausesandcomprehensivegenomicscreening.Thisstudyhasimportantimplicationsforhealthpolicyandpublicfundingforepilepticencephalopathyandotherneurologicalconditions.