OBJECTIVES: Gastric cancer is the second most common cancer and the second leading cause of cancer-related death in China. It is estimated that approximately half of the new cases are in China. Apatinib, a novel vascular endothelial growth factor receptor 2 tyrosine kinase inhibitor, shows survival benefits in treating chemotherapy-refractory advanced or metastatic gastric or gastroesophageal junction adenocarcinoma in the phase III trial. The objective of this study was to evaluate the cost-effectiveness of apatinib from a Chinese payer’s perspective. METHODS: A Markov model was developed to simulate disease progression and determine costs and outcomes over a 5-year time horizon. Incremental cost-effectiveness ratio (ICER) of apatinib to best supportive care (BSC) was calculated. Current apatinib patient assistance program (PAP) that offers donation after 3 cycles of treatment is available in China and therefore was taken into consideration in the present analysis. Data of BSC was collected from direct medical record. The model parameters and utilities were derived from previously published trials or literatures, and costs data were obtained from public sources. A 5% annual discount rate was applied to both costs and outcomes. RESULTS: Compared with BSC, the improvement following apatinib PAP in life-years (LYs), progression-free life-years (PFLYs), and quality-adjusted life years (QALYs) were 0.303, 0.193 and 0.237 years, respectively. The incremental cost with apatinib was $4868, yielding the ICER of $20,540 per QALY gained, which was lower than the willingness-to-pay threshold of $24,000 per QALY gained. Sensitivity analysis showed that the major drivers of cost effectiveness were treatment-related utility and cost of apatinib. CONCLUSIONS: The present analysis suggests that apatinib therapy is cost-effective alternative for patients with advanced or metastatic gastric or gastroesophageal junction adenocarcinoma who failed at least two lines of prior chemotherapy in China.