The need to dry biomass feedstocks before they can be gasified can place a large energy and capital cost burden on small-to-medium scale biomass gasification plants for the production of heat and power. Drying may not always be unavoidable, but as biomass moisture content to the gasifier increases, the quality of the product gas deteriorates along with the overall performance of the whole system. This system modelling study addresses the influence of feedstock moisture content both before and after drying on the performance and cost of a biomass gasifier-engine system for combined heat and power at a given scale and feedstock cost. The scale range considered 0.5-3.0 MWe. The system comprises an updraft gasifier with external thermal and catalytic tar cracking reactors, gas clean-up and a spark-ignition gas engine. A spreadsheet-based system model is constructed, with individual worksheets corresponding to sub-models of system components, and a number of drying technology options and modes of operation are examined. Wherever possible, data supplied by manufacturers or taken from real systems is used in the construction of the sub-models, particularly in the derivation of cost functions.