We investigated the cost-effectiveness of treating iron deficiency anemia (IDA) with ferric citrate hydrate (FC) in Japan. We employed four treatment strategies: switching from sodium ferrous citrate (SF) to FC at (1) 500 mg (approximately 120 mg of iron) per day or (2) 1000 mg (approximately 240 mg of iron) per day in patients with SF-induced nausea/vomiting, or starting treatment with FC at (3) 500 mg/day or (4) 1000 mg/day. We evaluated the cost-effectiveness of these strategies compared with SF 100 mg (100 mg of iron) per day. Incremental effects over 26 weeks relative to SF 100 mg were 0.0052 quality-adjusted life years (QALYs) for (1) and (2), and 0.0044 QALYs for (3) and (4). From the payer's perspective, incremental cost-effectiveness ratios (ICERs: JPY/QALY) against SF 100 mg were: (1) 1,107,780, (2) 2,257,477, (3) 5,588,430, and (4) 11,544,816. All four FC strategies were dominant (less costly and more effective) from a limited societal perspective. Treatment with FC for IDA was cost-effective (ICER ≤ JPY 5,000,000/QALY) when switching strategies from the payer perspective, and cost-saving (all FC strategies) from limited societal perspectives. Individual patients' characteristics and cost-effectiveness should be considered in treatment selection.