OBJECTIVES: China has a large and growing elderly population. In 2012, 171 million Chinese residents were over 60 years old, and this segment of the population is expected to grow to 487 million by 2050. Malnutrition is widespread among older Chinese adults, with estimates of prevalence in the literature ranging from 5.3% to 37.5%. However, there is little research on the impact of malnutrition on hospital costs for older Chinese adults. This study aims to investigate the association between malnutrition and hospital inpatient cost in community-dwelling elderly Chinese. METHODS: We use 2013 China Health and Retirement Longitudinal Study (CHALRS) data, which consists of nationally representative socio-demographic, economic and health information of community-dwelling adults aged 45 years or older (our sample is limited to those age 60 and older). Measures of hand grip strength, Body Mass Index (BMI), and weight loss were used as indicators of malnutrition status. Multivariate regressions were used to explore the effect of malnutrition on respondent’s number of hospital admissions and total inpatient cost in the past year. In addition, we controlled for socio-demographics, health status, and quality of health care in the regression tests. RESULTS:  Malnutrition was associated with more hospital admissions and higher inpatient costs (both p values < 0.01). Specifically, an average malnourished older Chinese adult has 32% more hospital admissions (0.29 vs. 0.22; p < 0.01), and 31% higher costs for all inpatient services in the past year compared to a well-nourished senior (¥2,066 vs. ¥1,580; p <0.01). In total, malnutrition increased hospital inpatient cost by ¥10.69 billion. CONCLUSIONS:  Malnutrition was associated with more hospital admissions and higher inpatient costs among community-dwelling older Chinese adults. Therefore, inexpensive efforts to address malnutrition including malnutrition screening and oral nutrition supplements could be effective in reducing hospital cost for the Chinese elderly.