The classical assembly line balancing problem consists of assigning assembly work to workstations. In the presence of setup times that depend on the sequence of tasks assigned to each workstation, the problem becomes more complicated given that two interdependent problems, namely assignment and sequencing, must be solved simultaneously. The hierarchical nature of these two problems also suggest a natural decomposition of the problem. This paper adopts such an approach and describes an exact algorithm based on Benders decomposition to solve both simple and mixed-model assembly line balancing problems with setups. The algorithm is tested on a set of benchmark instances and numerically compared against a mixed-integer linear programming formulation of the problem solved using an off-the-shelf optimizer.