Background This analysis estimates the association between smoking-related knowledge and smoking behaviour in a Chinese context. To identify the specific knowledge most directly related to smoking status, we used a novel latent variable analysis approach to adjust for the high correlations between different measures of knowledge about tobacco smoking. Method Data are from the Global Adult Tobacco China Survey, a nationally representative sample of 13 354 household-dwelling individuals 15 years of age or older. Multinomial logistic regressions estimated the association between smoking status (ie, never smoked, current smoker or past smoker) and four smoking-related beliefs: whether or not smoking causes lung cancer, heart attack and stroke, and whether or not low-tar cigarettes are less harmful. A latent variable approach reassessed these associations while taking into account the general level of knowledge about smoking. Results After demographic variables and general knowledge about smoking had been controlled for, the belief that low-tar cigarettes are not less harmful was more prevalent in persons who had never smoked than in current smokers (OR=1.3 (95% CI 1.0 to 1.7) in men and OR=2.8 (95% CI 1.3 to 5.9) in women); this association was even stronger when past smokers and current smokers were compared (OR=2.1 (95% CI 1.5 to 3.0) in men and OR=5.0 (95% CI 1.3 to 20.1) in women). Conclusions Compared with those who have never smoked and those who have ceased smoking, current smokers in China are more likely to believe that low-tar cigarettes are less harmful than regular cigarettes.