Randomized controlled trials (RCT) have shown the efficacy of screening for colorectal cancer (CRC) using the faecal occult blood test (FOBT) with follow-up by colonoscopy. We evaluated the potential impact of population-based screening by FOBT followed by colonoscopy in Canada: mortality reduction, cost-effectiveness, and resource requirements. The microsimulation model POHEM was adapted to simulate CRC screening using Canadian data and RCT results about test sensitivity and specificity, participation, incidence, staging, progression, mortality and direct health care costs. In Canada, biennial screening of 67% of individuals aged 50-74 in the year 2000 resulted in an estimated 10-year CRC mortality reduction of 16.7%. The life expectancy of the cohort increased by 15 days on average and the demand for colonoscopy rose by 15% in the first year. The estimated cost of screening was $112 million per year or $11,907 per life-year gained (discounted at 5%). Potential effectiveness would depend on reaching target participation rates and finding resources to meet the demand for FOBT and colonoscopy. This work was conducted in support of the National Committee on Colorectal Cancer Screening.