Erlotinib combined with gemcitabine has not been evaluated in Japanese patients with unresectable pancreatic cancer. This two-step phase II study assessed the safety and pharmacokinetics of erlotinib 100 mg/day (oral) plus gemcitabine 1000 mg/m2 (i.v. days 1, 8, 15) in a 28-day cycle in the first step, and efficacy and safety in the second step. The primary end-point was safety. One hundred and seven patients were enrolled (first step, n = 6; second step, = 101). The most common adverse event was RASH (compiled using the preferred terms rash, acne, exfoliative rash, dermatitis acneiform, erythema, eczema, dermatitis and pustular rash) in 93.4% of patients. One treatment-related death occurred. While interstitial lung disease-like events were reported in nine patients (8.5%; grade 1/2/3, 3.8/2.8/1.9%), all patients recovered or improved. The median overall survival, the 1-year survival rate and median progression-free survival were 9.23 months, 33.0% and 3.48 months, respectively. The overall response and disease control rates were 20.3% and 50.0%, respectively. In Japanese patients with unresectable pancreatic cancer, erlotinib plus gemcitabine had acceptable toxicity and efficacy that was not inferior to that seen in Western patients. (Cancer Sci 2011; 102: 425–431)