Rotavirus vaccines have shown great potential for reducing the disease burden of the major cause of severe childhood gastroenteritis. The decision regarding whether rotavirus vaccination will be introduced into the national immunization program is currently being reviewed. The conclusions of previous evaluations of rotavirus vaccination cost-effectiveness contradict each other. This is the first analysis to incorporate a dynamic transmission model to assess the cost-effectiveness of rotavirus vaccination in England and Wales. Most previously reported models do not include herd protection, and thus may underestimate the cost-effectiveness of vaccination against rotavirus. We incorporate a dynamic model of rotavirus transmission in England and Wales into a cost-effectiveness analysis to determine the probability that the pentavalent rotavirus vaccination will be cost-effective over a range of full-course vaccine prices. This novel approach allows the cost-effectiveness analysis to include a feasible level of herd protection provided by a vaccination program. Our base case model predicts that pentavalent rotavirus vaccination is likely to be cost-effective in England and Wales at £ 60 per course. In some scenarios the vaccination is predicted to be not only cost-effective but also cost-saving. These savings could be generated within ten years after vaccine introduction. Our budget impact analysis demonstrates that for the realistic base case scenarios, 58-96% of the cost outlay for vaccination will be recouped within the first four years of a program. Our results indicate that rotavirus vaccination would be beneficial to public health and could be economically sound. Since rotavirus vaccination is not presently on the immunization schedule for England and Wales but is currently under review, this study can inform policymakers of the cost-effectiveness and budget impact of implementing a mass rotavirus vaccine strategy.