INTRODUCTION: Current recommendations for gestational diabetes mellitus (GDM) include screening and treatment at 24–28 weeks’ gestational age. Whether treatment prior to 24–28 weeks improves maternal and infant outcomes is unclear. A recent randomized trial found that immediate treatment of GDM at 20 weeks led to lower incidence of several adverse neonatal outcomes including respiratory distress syndrome (RDS) and shoulder dystocia with brachial plexus injury (BPI). We evaluated the clinical benefits and cost effectiveness of immediate versus deferred treatment in pregnant women with GDM. METHODS: We used TreeAge to construct a decision-analytic model comparing outcomes between those who received immediate versus deferred GDM treatment. Our theoretical cohort was 71,679, the approximate number of GDM cases diagnosed early in the United States annually. Outcomes were BPI, RDS with neonatal intensive care unit admission, neurodevelopmental delay (NDD), cost, and quality-adjusted life years (QALYs). Probabilities were derived from a recent randomized trial and other peer-reviewed literature. We used a discount rate of 3% and a willingness-to-pay of $100,000/QALY. RESULTS: In our theoretical cohort, immediate treatment led to fewer cases of BPI (25 versus 77), RDS (7,054 versus 12,176). There was no difference between either treatment for NDD. Despite increased costs, immediate treatment was a cost-effective strategy as it resulted in increased QALYs with an incremental cost-effectiveness ratio of $54,434/QALY. CONCLUSION: Immediate treatment was a clinically beneficial and cost-effective strategy to reduce cases of BPI and RDS. Given improvement of certain neonatal outcomes, it may be beneficial to screen and immediately treat early-onset GDM.