This study determined the direct and indirect epidemiologic and economic effects of lactational treatment of new bovine subclinical intramammary infections (IMI) caused by contagious pathogens using an existing bioeconomic model. The dynamic and stochastic model simulated the dynamics of Staphylococcus aureus, Streptococcus uberis, Streptococcus dysgalactiae, and Escherichia coli during lactation and the dry period in a 100-cow dairy herd during 1 quota year. Input parameters on cure were obtained from recent Dutch field data. The costs of clinical IMI, subclinical IMI, and intervention were calculated into the combined total annual net costs of IMI per herd. The cost effectiveness of 4 scenarios with lactational intervention was determined; scenarios included no intervention, treatment after 1 mo of infection, treatment after 2 mo of infection, and treatment after 1 mo of infection and culling of uncured cows after 2 mo of infection. Model behavior was observed for variation in parameter input values. Compared with no lactational intervention, lactational intervention of new subclinical IMI resulted in fewer clinical flare ups, less transmission within the herd, and much lower combined total annual net costs of IMI in dairy herds. Antimicrobial treatment of IMI after 1 mo of infection and culling of uncured cows after 2 mo of infection resulted in the lowest costs, whereas treatment after 2 mo of infection was associated with the highest costs between the scenarios with intervention. Changing the probability of cure resulted in a nonlinear change in the cumulative incidence of IMI cases and associated costs. Lactational treatment was able to prevent IMI epidemics in dairy herds at high transmission rates of Strep. uberis, Strep. dysgalactiae, and E. coli. Lactational treatment did not limit the spread of Staph. aureus at high transmission rates, although the associated costs were lower compared with no intervention. To improve udder health in a dairy herd, lactational treatment of contagious subclinical IMI must therefore be preceded by management measures that lower the transmission rate. Lactational treatment of environmental subclinical IMI seemed less cost effective. Detection of subclinical IMI needs improvement to be able to most effectively treat subclinical IMI caused by contagious pathogens during lactation.