OBJECTIVES:  Transcatheter arterial chemoembolization (TACE) and TACE in combination with sorafenib (TACE-sorafenib) have shown a significant survival benefit for the treatment of unresectable hepatocellular carcinoma (HCC). Adopting either as a first-line therapy carries major cost and resource implications. The objective of this study was to estimate the relative cost-effectiveness of TACE against TACE-sorafenib for unresectable HCC using a decision analytic model. METHODS:  A Markov cohort model was developed to compare TACE and TACE-sorafenib. Transition probabilities and utilities were obtained from systematic literature reviews, and costs were obtained from West China Hospital, Sichuan University, China. Survival benefits were reported in quality-adjusted life-years (QALYs). The incremental cost-effectiveness ratio (ICER) was calculated. Sensitive analysis was performed by varying potentially modifiable parameters of the model. RESULTS:  The base-case analysis showed that TACE cost $26,950.90 and yielded survival of 0.71 QALYs, and TACE-sorafenib cost $44,541.70 and yielded survival of 1.01 QALYs in the entire treatment. The ICER of TACE-sorafenib versus TACE was $57,459.13 per QALY gained, which was above threshold for cost-effectiveness in China. Sensitivity analysis revealed that the major driver of ICER was the cost post TACE-sorafenib therapy with stable state. CONCLUSIONS:  TACE is a more cost-effective strategy than TACE-sorafenib for the treatment of unresectable HCC.