Gasification is one of the most promising technologies for conversion of biomass into power generation due to its tremendous potential for improving the efficiency of energy conversion and reducing the cost of electricity (COE). In this study, the techno-economic feasibility of distributed power plants via wheat/corn straw gasification in China was investigated, and an economic model was established using a basic discounted cash flow analysis to estimate economic performance of the power plants. The effects of key variables (such as scales, feedstock cost, electricity prices and run time etc.) on economic performance were analyzed, and the results showed that plant scale and straw cost are the most influential parameters on the plant economic performance. It is estimated that a plant with a capacity of 5 MWe can be the optimal option for agricultural straw gasification for distributed power generation, the COE is 0.402 CNY/kWh, and SO2, NOx and dust emission are 2.5, 2.0 and 0.038 g/kWh, respectively. The net present value (NPV) and the annual average of return on investment (ROI) of the plant are 85.9 million CNY and 49.7%, respectively, with a high discount of 0.12 at a current feed-in tariff (0.75 CNY/kWh) for biomass to power in China, suggesting a good economic feasibility and market competitiveness. The deployment of agricultural residues resources gasification to distributed power generation displacing coal-fired power to supply electricity with rural area shows a significant potential in pollutants emission reduction and coal saving. Biomass gasification for distributed power generation serves as a sustainable technique for utilization of agricultural resources in practice, and would be widely applied in the near future supported by renewable energy strategies of Chinese government.