Background: Majority of patients of hepatocellular carcinoma (HCC) in India present in advanced stages, when curative treatment options are limited. We undertook this study to assess the cost-effectiveness of treating advanced HCC patients with sorafenib compared with best supportive care (BSC). Methods: A Markov model was parameterized to model the lifetime costs and consequences of treating advanced HCC patients with sorafenib versus BSC using a societal perspective. Cost of routine care, diagnostics, management of complications in both the arms and management of adverse effects of sorafenib treatment were considered. A probabilistic sensitivity analysis was undertaken to assess the effect of parameter uncertainty. Results: The incremental cost and benefit gained by treating HCC using sorafenib was Indian rupees 94,182 ($1459) and 0.19 quality adjusted life years (QALYs) per patient, implying an incremental cost of Indian rupees 507,520 ($7861) per QALY gained. Conclusions: Sorafenib is not cost-effective for use in advanced hepatocellular carcinoma treatment in India.