OBJECTIVES: Shenzhen is a major city in Guangdong province, and is among the top 7 richest cities in China by per capita GDP.  Shenzhen took the lead in establishing a supplementary medical insurance for major and critical diseases in China.   The critical disease insurance (CDI) system aims to expand the coverage of the country’s basic health care insurance system to include the treatment of critical illness, to relieve urban and rural families of the heavy burden of catastrophic medical costs. The objective of this study is to analyze the design and development of the CDI system in Shenzhen, and provide early insights and learnings into the development of the CDI systems in other cities in China. METHODS: To analyze the framework of CDI system in Shenzhen, a literature/document review and expert consultation were conducted to obtain information. RESULTS: The Shenzhen CDI is an extension and supplementary insurance to the basic social medical insurance. It is a voluntary insurance policy with low premiums and broad coverage. For example, for outpatient drugs that are on the CDI reimbursement drug list, the reimbursement rate is 70%, up to ¥150,000 per person per year. The CDI policy guidance and regulation were set by the local government, and executed by commercial insurance institutions. The government uses commercial insurance agencies’ professional competencies and market mechanisms to improve the operating efficiency, service levels and quality of CDI. The government also emphasizes that insurance companies should only achieve controlled profit levels set by government. CONCLUSIONS: The introduction of Critical Diseases Insurance effectively reduces the burden of medical costs arising from serious illness, alleviates poverty caused by disease, and facilitates patients’ access to effective treatments to improve health outcomes. Further analyses over time will quantify the program’s effects on these endpoints.