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OBJECTIVES To provide an evaluation of medical expenditures induced by depression and depressive symptoms among rural elderly in China. STUDY DESIGN The panel dataset used for this study is taken from the China Family Panel Studies (CFPS) data for the years 2012 and 2016. We examined the case of rural elderly who were 60 years old or older at the time of the 2012 survey and 64 years old or older at the time of the 2016 survey and then created a panel dataset that includes 2938 rural elderly for both years to estimate the influence of depressive symptoms/depression on medical cost. METHODS Both two part model and four part model were used to estimate the influence of depressive symptoms and depression on medical expenditure. Then a counter-factual method was used to calculate the cost of depressive symptoms and depression among rural elderly in China. RESULTS Mental health status has significant effects on individual medical expenses, and they aggregately contribute to 47.26% of total personal expected medical expenditures. Specifically, the rural group, the female group, the widowed group, and the poorly educated group have higher medical expenditures because of depressive status than the other groups. CONCLUSIONS Mental health status significantly increased both the chance of undergoing medical care and the degree of medical expenditure among rural elderly in China. This situation is more serious in some vulnerable groups. Therefore, the Chinese government needs to reform its mental health of rural elderly and insurance institutions to eliminate the policy-caused barriers to mental health resources, especially for vulnerable groups.