Background Breast health has become an increasingly important issue among the veteran population. Options for the evaluation of a breast mass or a suspicious mammographic finding include open surgical biopsy at the Veterans Affairs (VA) hospital or percutaneous image-guided biopsy at an affiliated academic institution. We examined the costs and trends in the use of surgical versus percutaneous image-guided biopsy procedures in this diagnostic algorithm. Methods A retrospective review was performed of 62 patients who presented to the VA General Surgery Clinic with a breast mass or abnormal mammogram from 2003 to 2005. The Massachusetts Utilization Multiprogramming System and the Decision Support System software packages were used to track costs of procedures, by Current Procedure Terminology code and date of service, performed at the affiliated academic institution and at the VA hospital. These data were analyzed and described using the R statistical computing environment. Results Forty-six patients were evaluated using open biopsy techniques in the VA operating room, including 8 incisional biopsies, 21 excisional biopsies, and 17 needle-localization excisional biopsies. Sixteen patients were evaluated using minimally invasive biopsies at the affiliated academic institution, including 3 ultrasound-guided cyst aspirations, 6 ultrasound-guided core biopsies/vacuum-assisted core biopsies, 10 stereotactic breast biopsies, and 1 fine-needle aspiration. The average cost to evaluate a breast mass or abnormal mammographic finding in the operating room was $4,368.00 (SD, $2,586.00), with a median cost of $3,479.00. The average cost to evaluate a breast mass or mammographic abnormality using percutaneous image-guided procedures was $1,267.00 (SD, $536.00), with a median of $1,239.00. From 2003 to 2005, the proportion of percutaneous biopsies increased from 13% to 48%, whereas the proportion of open biopsies decreased from 88% to 52%. Conclusions Over a recent 3-year period, we observed a 3.8-fold increase in the use of percutaneous image-guided techniques for the evaluation of breast lesions in the VA Tennessee Valley Healthcare System. Diagnosis by percutaneous techniques allows planning for a definitive surgery if a lesion is malignant or possible avoidance of a surgical intervention if the lesion is benign. Our data show that the costs associated with open biopsy techniques exceed those associated with percutaneous biopsies. For VA hospitals with available resources, the option of image-guided percutaneous biopsy techniques is a cost-effective alternative to open surgical biopsy.