OBJECTIVES: The objective of the study was to evaluate the cost-effectiveness of 1 year peginterferon alfa-2a compared to 4 years entecavir for the treatment of HBeAg-positive chronic hepatitis B in China. METHODS: A Markov health-state model was designed to evaluate the direct medical costs and outcomes (life years and QALYs gained) of treating HBeAg-positive chronic hepatitis B in China. The model included 10 health states – Chronic hepatitis B (CHB), HBeAg seroconversion, HBsAg loss, CHB with resistance, Compensated cirrhosis, Decompensated cirrhosis, Hepatocellular carcinoma, Liver transplant, Post-liver transplant and death. The model incorporates a maximum analysis time horizon of 80 years with yearly cycles. The clinical and quality of life data were obtained from published literature and re-confirmed based on a questionnaire survey from a clinical expert panel of 20 hepatitis B specialists. From the perspective of China’s health insurance system, cost data was calculated based on the published literature about economic burden of chronic hepatitis B. A discounting rate at 3% was used to discount utilities and medical costs happened at different years. A univariate sensitivity analysis was performed to understand the key drivers and general sensitivity of the model. RESULTS: The model results showed that the utilization of 1 year peginterferon alfa-2a treatment for HBeAg-positive CHB can prolong 0.32 QALYs, compared to the 4 years entecavir treatment (16,394 QALYs vs. 16,074 QALYs). The total cost per patient treated with peginterferon alfa-2a was US$22,221, and US$19,989 for patient treated with entecavir. The discounted incremental cost per QALY gained for pegainterferon alfa-2a was US$6965. CONCLUSIONS: The results of the model suggest that 1 year pegainterferon alfa-2a improves health outcomes in a cost-effective manner compared with 4 years entecavir in the treatment of HBeAg-positive chronic hepatitis B in China.