OBJECTIVES:  International five-year survival rates for metastatic kidney and renal pelvis cancer are estimated at between 12-20%, indicating significant unmet clinical need for effective therapies. Currently, everolimus is a subsidised treatment option in Australia for patients who have progressive disease following first-line treatment with a tyrosine kinase inhibitor. Nivolumab is the first immunotherapy agent explored in RCC (CheckMate-025) and this study sought to assess the cost utility of nivolumab versus everolimus. METHODS:  A 3-state (clinical progression free, clinical disease progression, dead) Markov model was developed with 2-week cycles. Individual patient data from the pivotal study directly informed the health state transition probabilities until a minimum follow-up of 14 months. Thereafter, survival curves were extrapolated to 10 years, followed by convergence of the curves at 20 years. Australian specific health state utilities, drug costs and disease management costs were drawn from published sources. A range of sensitivity analyses were undertaken to test the robustness of the results of the modelled economic evaluation. RESULTS:  Nivolumab added an average of 0.78 life years (LYs) and 0.65 quality adjusted life years (QALYs) per person at an additional cost of US$45,000 (discounted), resulting in ICERs of US$58,000/LY saved and US$69,000/QALY saved. The sensitivity analysis showed that the result was most sensitive to the time horizon and duration of treatment. However, the ICER was stable and generally stayed within +/-10% of the base case for most of the scenarios in tested in the sensitivity analyses. CONCLUSIONS:  Nivolumab represents a cost-effective alternative to everolimus, with potential to improve quality of life and survival for RCC patients in Australia.