Objectives To determine the accuracy of remote diagnosis of congenital heart disease (CHD) by real-time transmission of echocardiographic images via integrated services digital network (ISDN) lines, to assess the impact on patient management and examine cost implications. Design Prospective comparison of echocardiograms on infants with suspected significant CHD performed as follows: (1) hands-on evaluation and echocardiogram by a paediatrician at a district general hospital (DGH) followed by (2) transmission of the echocardiogram via ISDN 6 with guidance from a paediatric cardiologist and finally (3) hands-on evaluation and echocardiogram by a paediatric cardiologist. The economic analysis compares the cost of patient care associated with the telemedicine service with a hypothetical control group. Setting Neonatal units of three DGH and a UK regional paediatric cardiology unit. Results Echocardiograms were transmitted on 124 infants. In five cases scans were inadequate for diagnosis. Of the remaining 119 tele-echocardiograms, a follow-up echocardiogram was performed on 109/119 (92%). Major CHD was diagnosed in 39/109 infants (36%) and minor CHD in 45 (41%). The tele-echo diagnosis was accurate in 96% of cases (κ=0.89). Unnecessary transfer to the regional unit was avoided in 93/124 patients (75%). Despite relatively high implementation costs, telemedicine care was substantially cheaper than standard care. Each DGH potentially saved money by utilising the telemedicine service (mean saving: £728/patient). Conclusions CHD is accurately diagnosed by realtime transmission of echocardiograms performed by paediatricians under live guidance and interpretation by a paediatric cardiologist. Remote diagnosis and exclusion of CHD affects patient management and may be cost saving.