The research objectives were two-fold: first, to systematically review the literature on the cost-effectiveness of home telehealth for chronic diseases, and second to develop a framework for the conduct of economic evaluation of home telehealth projects for patients with chronic diseases. A comprehensive literature search identified twenty-two studies (n = 4,871 patients) on home telehealth for chronic diseases published between 1998 and 2008. Studies were reviewed in terms of their methodological quality and their conclusions. Home telehealth was found to be cost saving from the healthcare system and insurance provider perspectives in all but two studies, but the quality of the studies was generally low. An evaluative framework was developed which provides a basis to improve the quality of future studies to facilitate improved healthcare decision making, and an application of the framework is illustrated using data from an existing program evaluation of a home telehealth program. Current evidence suggests that home telehealth has the potential to reduce costs, but its impact from a societal perspective remains uncertain until higher quality studies become available.