To quantify the economic impact of using silver diamine fluoride (SDF) to arrest the progression of dental caries in Medicaid-enrolled children (aged 1-5 years) relative to the standard restorative treatment from the Medicaid programs' perspective. We used Monte Carlo simulation to estimate averted restorative visits and associated expenditures for varying SDF effectiveness and intervention penetration levels. We compared the current standard of care for treating caries to applying SDF. We estimated expenditures from the 2010-2012 Medicaid Analytic Extract files for seven US states and the incremental cost effectiveness ratio for SDF application on averted restorative visits. Across the seven states, averted restorative visits ranged from 2,049 (Vermont) to 60,542 (North Carolina), assuming an SDF penetration level of 50%. Averted per-restorative visit costs ranged from $100 to $350 per-visit. There were higher averted per-restorative visit costs in nonmetropolitan counties than metropolitan counties. Providing SDF as a caries management strategy can reduce Medicaid program dental care expenditures by averting expensive caries treatment options. It could also prevent stressful restorative procedures. State Medicaid programs should consider reimbursing for SDF to arrest the progression of dental caries in young children.