AbstractDue to its fast economic growth and lifestyle changes, China is experiencing a rapid epidemiological transition from communicable to noncommunicable diseases (NCDs). Mental disorder such as depression is an important yet often neglected NCD and is becoming a growing cause of disability, suicides, and disease burden. This paper provides the first nationally representative estimate of the medical cost attributable to depression and depressive symptoms among the adult population in China. On the basis of the 2012 China Family Panel Studies survey, our results indicate that these mental health conditions have significant impacts on the individual medical expenditure, and they jointly contribute to 14.7% of total personal expected medical spending in China, with depression and depressive symptoms accounting for 6.9% and 7.8%, respectively. Given that patients with mental illness face multiple psychological and institutional barriers in seeking appropriate treatment, the high depression‐induced medical costs may be primarily driven by the cost‐shifting effect from mental health care to general health care, as mental disorders often coexist with other NCDs such as diabetes and hypertension. As an implication, our study calls for an urgent reform of China's mental health and insurance systems to remove the policy‐induced obstacles for the access to mental health care resources.