Background: Pembrolizumab is indicated as first-line therapy for cisplatin-ineligible patients with locally advanced or metastatic urothelial carcinoma (mUC) whose tumors express PD-L1 with a combined positive score (CPS) ≥ 10. This study aims to evaluate the cost‐effectiveness of pembrolizumab versus carboplatin plus gemcitabine in this setting from the US payer perspective. Methods: A partitioned-survival model was developed to measure the costs and effectiveness over a 20-year time horizon with an annual discount of 3%. Clinical outcomes of overall survival (OS) and progression-free survival, safety outcomes and time on treatment were modeled using data from the KEYNOTE-052 clinical trial for pembrolizumab and four clinical trials for carboplatin plus gemcitabine. Because clinical trials directly comparing these treatment strategies are not available, a simulation treatment comparison and a network meta-analysis were conducted to estimate comparative efficacy. Quality of life data extracted from EQ-5D questionnaires administered in KEYNOTE-052 were used to estimate utility, while cost data were estimated using US pricing lists and real-world data. Deterministic and probabilistic sensitivity analyses were conducted to assess the robustness of the results. Pembrolizumab was also compared with gemcitabine monotherapy in the scenario analyses. Results: Pembrolizumab was associated with a survival gain of 2.47 years and 1.90 quality adjusted life years (QALY), an incremental cost of $155,238, and an incremental cost per QALY gained of $81,493 versus carboplatin plus gemcitabine. Results were most sensitive to the time horizon, discount rate, pembrolizumab dosing intensity and OS hazard ratio. Pembrolizumab had 87% or 100% probability of being cost-effective vs. chemotherapy at a $100,000 or $150,000 willingness-to-pay threshold, respectively. Conclusions: Pembrolizumab appears cost-effective versus carboplatin plus gemcitabine as first-line treatment of cisplatin-ineligible and PD-L1 positive mUC patients in the US. The comparison of pembrolizumab with gemcitabine monotherapy yields similar conclusions.