Background: The Internet hospital, an innovative approach to providing health care, is rapidly developing in China because it has the potential to provide widely accessible outpatient service delivery via Internet technologies. To date, China's Internet hospitals have not been systematically investigated. Objective: The aim of this study was to describe the characteristics of China's Internet hospitals, and to assess their health service capacity. Methods: We searched Baidu, the popular Chinese search engine, to identify Internet hospitals, using search terms such as "Internet hospital," "web hospital," or "cloud hospital." All Internet hospitals in mainland China were eligible for inclusion if they were officially registered. Our search was carried out until March 31, 2017. Results: We identified 68 Internet hospitals, of which 43 have been put into use and 25 were under construction. Of the 43 established Internet hospitals, 13 (30%) were in the hospital informatization stage, 24 (56%) were in the Web ward stage, and 6 (14%) were in full Internet hospital stage. Patients accessed outpatient service delivery via website (74%, 32/43), app (42%, 18/43), or offline medical consultation facility (37%, 16/43) from the Internet hospital. Furthermore, 25 (58%) of the Internet hospitals asked doctors to deliver health services at a specific Web clinic, whereas 18 (42%) did not. The consulting methods included video chat (60%, 26/43), telephone (19%, 8/43), and graphic message (28%, 12/43); 13 (30%) Internet hospitals cannot be consulted online any more. Only 6 Internet hospitals were included in the coverage of health insurance. The median number of doctors available online was zero (interquartile range [IQR] 0 to 5; max 16,492). The median consultation fee per time was (sic)20 (approximately US $2.90, IQR (sic)0 to (sic)200). Conclusions: Internet hospitals provide convenient outpatient service delivery. However, many of the Internet hospitals are not yet mature and are faced with various issues such as online doctor scarcity and the unavailability of health insurance coverage. China's Internet hospitals are heading in the right direction to improve provision of health services, but much more remains to be done.