Background The purpose of this study was to compare, from a Chinese societal perspective, the projected health benefits, costs, and cost-effectiveness of adding pneumococcal conjugate heptavalent vaccine (PCV-7) to the routine compulsory child immunization schedule. Methods A decision-tree model, with data and assumptions adapted for relevance to China, was developed to project the health outcomes of PCV-7 vaccination (compared with no vaccination) over a 5-year period as well as a lifetime. The vaccinated birth cohort included 16,000,000 children in China. A 2 + 1 dose schedule at US$136.51 per vaccine dose was used in the base-case analysis. One-way sensitivity analysis was used to test the robustness of the model. The impact of a net indirect effect (herd immunity) was evaluated. Outcomes are presented in terms of the saved disease burden, costs, quality-adjusted life years (QALYs) and incremental cost-effectiveness ratio. Results In a Chinese birth cohort, a PCV-7 vaccination program would reduce the number of pneumococcus-related infections by at least 32% and would prevent 2,682 deaths in the first 5 years of life, saving $1,190 million in total costs and gaining an additional 9,895 QALYs (discounted by 3%). The incremental cost per QALY was estimated to be $530,354. When herd immunity was taken into account, the cost per QALY was estimated to be $95,319. The robustness of the model was influenced mainly by the PCV-7 cost per dose, effectiveness herd immunity and incidence of pneumococcal diseases. With and without herd immunity, the break-even costs in China were $29.05 and $25.87, respectively. Conclusions Compulsory routine infant vaccination with PCV-7 is projected to substantially reduce pneumococcal disease morbidity, mortality, and related costs in China. However, a universal vaccination program with PCV-7 is not cost-effective at the willingness-to-pay threshold that is currently recommended for China by the World Health Organization. [ABSTRACT FROM AUTHOR]