AimLiving‐donor liver transplantation (LDLT) is a highly effective life‐saving procedure; however, it requires substantial medical resources, and the cost‐effectiveness of LDLT versus conservative management (CM) for adult patients with end‐stage liver disease (ESLD) remains unclear in Japan.MethodsWe performed a cost‐effectiveness analysis using the Diagnostic Procedure Combination (DPC) data from the nationwide database of the DPC research group. We selected adult patients (18 years or older) who were admitted or discharged between 2010 and 2021 with a diagnosis of ESLD with Child–Pugh class C or B. A decision tree and Markov model were constructed, and all event probabilities were computed in 3‐month cycles over a 10‐year period. The willingness‐to‐pay per quality‐adjusted life‐year (QALY) was set at 5 million Japanese yen (JPY) (49,801 US dollars [USD]) from the perspective of the public health‐care payer.ResultsAfter propensity score matching, we identified 1297 and 111,849 patients in the LDLT and CM groups, respectively. The incremental cost‐effectiveness ratio for LDLT versus CM for Child–Pugh classes C and B was 2.08 million JPY/QALY (20,708 USD/QALY) and 5.24 million JPY/QALY (52,153 USD/QALY), respectively. The cost‐effectiveness acceptability curves showed the probabilities of being below the willingness‐to‐pay of 49,801 USD/QALY as 95.4% in class C and 48.5% in class B. Tornado diagrams revealed all variables in class C were below 49,801 USD/QALY while their ranges included or exceeded 49,801 USD/QALY in class B.ConclusionsLiving‐donor liver transplantation for adult patients with Child–Pugh class C was cost‐effective compared with CM, whereas LDLT versus CM for class B patients was not cost‐effective in Japan.