Purpose: Vandetanib is a once-daily oral inhibitor of vascular endothelial growth factor receptor (VEGFR) and epidermal growth factor receptor (EGFR) signaling. In this two-part phase II study, the efficacy and safety of vandetanib was compared with that of gefitinib, an inhibitor of EGFR signaling. Patients and Methods: Patients (N = 168) with locally advanced or metastatic (stage IIIB/IV) non-small-cell lung cancer (NSCLC), after failure of first-line with or without second-line platinum-based chemotherapy, received once-daily vandetanib 300 mg (n = 83) or gefitinib 250 mg (n = 85) until disease progression or evidence of toxicity (part A). After a 4-week washout period, eligible patients had the option to switch to the alternative treatment (part B). Progression-free survival (PFS) was the primary efficacy assessment in part A, which was designed to have a higher than 75% power to detect a 33% prolongation of PFS at a one-sided significance level of .2. Results: In part A, vandetanib prolonged PFS compared with gefitinib (hazard ratio = 0.69; 95% CI, 0.50 to 0.96; one-sided P = .013). Patients receiving vandetanib experienced adverse events that were manageable and generally consistent with inhibition of EGFR and VEGFR signaling, including diarrhea, rash, and hypertension. There were no unexpected safety findings with gefitinib. Overall survival, a secondary assessment, was not significantly different between patients initially randomly assigned to either vandetanib or gefitinib. Conclusion: The primary efficacy objective was achieved, with vandetanib demonstrating a significant prolongation of PFS versus gefitinib. Vandetanib 300 mg/d is currently being evaluated as a monotherapy in two randomized phase III studies in advanced NSCLC.