OBJECTIVES:  To evaluate direct medical costs, health outcomes, and cost-effectiveness of 48-week Peginterferon alpha-2a with 2nd line 2-years Entecavir treatment versus 3 years Entecavir treatment for HBeAg-positive chronic hepatitis B according to the Response Guided Treatment (RGT) strategy in China. METHODS: A Markov 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, with a maximum analysis time horizon of 80 years. 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. Based on the analysis of published literature, a two-round expert panel survey was conducted among 22 hepatitis B specialists nationally to identify clinical and utility data. From the perspective of China’s health insurance system, cost data was calculated based on the published literature about CHB economic burden. A discounting rate at 3% was used to discount medical costs and health outcomes that 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 Peginterferon regimen can prolong1.80 QALYs (15.00 years vs. 13.20 years), compared to the 3 years Entecavir treatment. The total cost per patient treated with Peginterferon and Entecavir was RMB 163,638 yuan (US$ 25,568) and RMB 145,116 yuan (US$ 22,674), respectively. The discounted incremental cost per QALY gained for Peginterferon regimen was RMB 10,298 yuan (US$ 1,609) (Exchange rate: 1 US$ = 6.4 CNY). CONCLUSIONS:  The results of the model suggest that 48-week Peginterferon alpha-2a with 2-years Entecavir treatment as 2nd line improves health outcomes in a cost-effective manner compared with 3 years Entecavir for the treatment of HBeAg-positive chronic hepatitis B in China.