The objective of this study was to compare the costs and outcomes associated with guardian-supervised directly observed treatment relative to the standard of care Directly Observed Therapy, Short Course (DOTS) provided by community health workers (CHW). New cases of culture-positive pulmonary tuberculosis (TB) treated in Vitória, Espírito Santo State, Brazil, between January 2005 and December 2006 were interviewed and chose their preferred treatment strategy. Costs incurred by providers and patients (and patients' families) were estimated, and cost-effectiveness was assessed by comparing costs per successfully treated patient. 130 patients were included in the study; 84 chose CHW-supervised DOTS and 46 chose guardian-supervised DOTS. 45 of 46 (98%) patients treated with guardian-supervised DOTS were cured or completed treatment compared to 70/84 (83%) of the CHW-supervised patients (p = 0.01). Logistic regression showed only the strategy of supervision to be a significant association with treatment outcome, with guardian-supervised care strongly protective. Cost per patient treated with guardian-supervised DOTS was US$398, compared to US$548 for CHW-supervised DOTS. The guardian-supervised DOTS is an attractive option to complement CHW-supervised DOTS.