Community-based diversion programs instead of incarcerating individuals with drug addiction have shown promise in reducing recidivism rates and improving public health outcomes but conflicting results regarding cost-effectiveness. This study systematically reviewed the economic evaluations (EE) of such programs to assess their cost-effectiveness and methodological approaches. We conducted a systematic literature review of EE studies on drug diversion programs, utilizing PubMed/Medline, Cochrane Library, Embase, ProQuest Library, SCOPUS, EBSCOhost, and Web of Science databases. Data extraction included study characteristics such as country, EE type perspective, cost-effectiveness, recidivism, and limitations. Quality assessment of EE was performed using the Quality of Health Economic Studies scale, while recidivism assessment utilized the Maryland Scientific Methods Scale (SMS). Out of 2,246 studies screened, 16 met the inclusion criteria, representing data from 12 diversion programs. The majority of studies were conducted in the US (56.3%), followed by Australia (31.3%), and the UK (12.5%). Societal perspective was the most common (56.3%), with funding primarily from nonprofits (81.3%). EE types included cost-utility analysis (n = 3), Cost-effectiveness analysis (n = 4), cost-minimization analysis (n = 4), and Cost benefit analysis (n = 5). Consideration of the criminal justice system (93.8%) and health-related costs (93.8%) was frequent. Diversion programs were found to be cost-effective and associated with reduced recidivism, particularly among prison-releasers (n = 3). Data bias was reported in 75% of studies as the main limitation. Diversion programs reduce the cost of the criminal justice system, but increase healthcare and community costs; however, it is not general, thus, an appropriate perspective must be applied when considering this relationship. Considering their cost-effectiveness and recidivism, diversion programs may prioritize prison releasers. Further research is required to conduct a cost-utility analysis, which has rarely been conducted.