Background Influenza is a common viral respiratory infection that causes epidemics and pandemics in the human population. Oseltamivir is a neuraminidase inhibitor-a new class of antiviral therapy for influenza. Although its efficacy and safety have been established, there is uncertainty regarding whether influenza-like illness (ILI) in children is best managed by oseltamivir at the onset of illness, and its cost-effectiveness in children has not been studied in China. Objective To evaluate the cost-effectiveness of post rapid influenza diagnostic test (RIDT) treatment with oseltamivir and empiric treatment with oseltamivir comparing with no antiviral therapy against influenza for children with ILI. Methods We developed a decision-analytic model based on previously published evidence to simulate and evaluate 1-year potential clinical and economic outcomes associated with three managing strategies for children presenting with symptoms of influenza. Model inputs were derived from literature and expert opinion of clinical practice and research in China. Outcome measures included costs and quality-adjusted life year (QALY). All the interventions were compared with incremental cost-effectiveness ratios (ICER). Results In base case analysis, empiric treatment with oseltamivir consistently produced the greatest gains in QALY. When compared with no antiviral therapy, the empiric treatment with oseltamivir strategy is very cost effective with an ICER of RMB 4,438. When compared with the post RIDT treatment with oseltamivir, the empiric treatment with oseltamivir strategy is dominant. Probabilistic sensitivity analysis projected that there is a 100% probability that empiric oseltamivir treatment would be considered as a very cost-effective strategy compared to the no antiviral therapy, according to the WHO recommendations for cost-effectiveness thresholds. The same was concluded with 99% probability for empiric oseltamivir treatment being a very cost-effective strategy compared to the post RIDT treatment with oseltamivir. Conclusion In the Chinese setting of current health system, our modelling based simulation analysis suggests that empiric treatment with oseltamivir to be a cost-saving and very cost-effective strategy in managing children with ILI.