Objective: Gefitinib, an epidermal growth factor receptor (EGFR) tyrosine kinase inhibitor, is a new treatment option for non-small cell lung cancer (NSCLC). Some studies have found better clinical outcomes for gefitinib treatment in women, never-smokers, certain mutation in the tumor EGFR gene, and patients with adenocarcinoma and in East Asian ethnicity. However, gefitinib is currently regarded as a salvage treatment rather than a first-line option. The objective of this study was to assess the cost-effectiveness of gefitinib for first-line treatment of the inoperable, chemo-naïve NSCLC patients in Taiwan. Methods: We developed a Markov model of the cost, quality of life, survival, and incremental cost-effectiveness of the alternative option with gefitinib for first-line treatment, as compared with current practice of platinum-based chemotherapy regiments. Variables of clinical effectiveness were determined from corresponding trials. The economic analysis adopted the healthcare payer's perspective, and only direct medical costs were taken into account. Results: Use of gefitinib for first-line treatment had a better mean survival than platinum-based chemotherapies (13.1 versus 11.6 months) while increasing lifetime cost. Given the base-case assumptions, we found that gefitinib increased life expectancy by 1.49 months, or 0.80 quality-adjusted months, at an estimated cost of $4,140 per treated patient, for an incremental cost-effectiveness ratio (ICER) of $62,100 per quality-adjusted life-year (QALY). The ICER would decrease to $48,600 per QALY gained when such analysis was applied to a subgroup of patients with molecular marker of EGFR exon 19 deletion or L858R mutations while they had a significantly longer mean survival of 20.8 months. Sensitivity analyses showed that this ICER remained below $100,000 per QALY for all model variables. Conclusion: Use of gefitinib for first-line treatment has a cost-effectiveness ratio below $50,000 per QALY gained in advanced NSCLC patients with preferred clinical characteristics in which a significant extension of overall survival has been demonstrated.