Objective To assess the validity and cost of a screening test for primary liver cancer using combined serum α fetoprotein testing and ultrasonography. Setting An urban community in Shanghai, China. Methods 9373 subjects aged 35 to 59 with positive hepatitis B surface antigen (HBsAg) or chronic hepatitis were studied. Outcome measures were detection rate, false positive rate, and positive predictive value, the cost for each primary liver cancer detected, and the average cost of detecting each additional primary liver cancer by the combined method. The number of small primary liver cancers detected was used for the economic evaluation. Results 20 294 screening examinations were carried out. Primary liver cancer was detected in 51 subjects, 36 of whom had small primary liver cancer. When α fetoprotein and ultrasonography were used in parallel the detection rate, false positive rate, and positive predictive value were 92%, 7.5%, and 3.0%, respectively; the cost for each primary liver cancer detected was 30 206 RMB (Chinese currency, $3639). When ultrasonography was used alone the detection rate, false positive rate, and positive predictive value were 84%, 2.9%, and 6.6%, respectively; the cost for each primary liver cancer detected was 16 451 RMB ($1982). When the α fetoprotein test was used alone the detection rate, false positive rate, and positive predictive value were 69%, 5.0%, and 3.3%, respectively; the cost for each primary liver cancer detected was 25 139 RMB ($3029). Conclusion The combination of both screening methods results in a relatively small increase in detection but a considerably higher false positive rate, increasing the costs. The combined test may be the best choice for primary liver cancer screening in developed areas of China, but otherwise, ultrasonography alone is the method of choice.