Prescribed burning has, in the past decade, become the focus of debate among policy makers, federal and private land managers, and the public. To manage fire effectively, the USDA Forest Service has formally recognized the need for economic analysis. It is stated in the Federal Wildland Fire Policy of 1995 that fire management alternatives will be based on science and sound ecological and economic principles. This article briefly examines key issues of the Federal Wildland Fire Policy from an economic perspective, and reviews the economic literature pertaining to prescribed burning. In particular, attention is paid to research regarding costs and benefits, efficiency, risk, and the wildland-urban interface. Recommendations for future economic research include focusing on defining a production function that relates economic and ecological outcomes with respect to prescribed fire; assessment of long-term cumulative effects; and finally, a comprehensive assessment of risk including decision making at the agency level.