Iodine is beneficial against Graves' thyrotoxicosis, though its effects are short-lived. However, its long-term effectiveness as an initial therapy has not been fully elucidated. Here, we compared the effects of potassium iodine (KI) and methimazole (MMI) in Graves' thyrotoxicosis and on thyrotropin receptor antibody (TRAb) levels. Between 2008 and 2011, 293 patients with untreated Graves' disease visited the outpatient clinic of Juntendo University. Of these, 227 patients were treated with MMI and 30 treated with KI as the initial therapy. To compare the effects of KI and MMI, we identified patients with similar probabilities of receiving MMI or KI using propensity score (PS) analysis based on the observed clinical features. PS matching created 20 matched pairs of patients with Graves' disease treated with MMI and KI. The baseline characteristics of post-matched patients treated with MMI were comparable to those treated with KI (FT3; 7.16 ± 2.30, 6.56 ± 1.85 pg/ml, FT4; 2.57 ± 0.79, 2.49 ± 0.70 ng/dl, respectively). The initial dose of MMI was 14.0 ± 8.2 mg/day and that of KI was 53.6 ± 11.7 mg/day. Three patients of the KI group did not respond to the monotherapy, requiring the inclusion of antithyroid drugs. One patient on MMI developed moderate skin eruption, but continued the treatment. Patients who continued the initial treatment showed significant and comparable reductions in FT4, FT3 and TRAb by MMI as well as by KI at the end of 12-month treatment. Although patients were limited to mild untreated Graves' disease thyrotoxicosis, KI offers a possible alternative initial treatment for this condition.