Abstract Motivation Due to cancer heterogeneity, the therapeutic effect may not be the same when a cohort of patients of the same cancer type receive the same treatment. The anticancer drug response prediction may help develop personalized therapy regimens to increase survival and reduce patients’ expenses. Recently, graph neural network-based methods have aroused widespread interest and achieved impressive results on the drug response prediction task. However, most of them apply graph convolution to process cell line-drug bipartite graphs while ignoring the intrinsic differences between cell lines and drug nodes. Moreover, most of these methods aggregate node-wise neighbor features but fail to consider the element-wise interaction between cell lines and drugs. Results This work proposes a neighborhood interaction (NI)-based heterogeneous graph convolution network method, namely NIHGCN, for anticancer drug response prediction in an end-to-end way. Firstly, it constructs a heterogeneous network consisting of drugs, cell lines and the known drug response information. Cell line gene expression and drug molecular fingerprints are linearly transformed and input as node attributes into an interaction model. The interaction module consists of a parallel graph convolution network layer and a NI layer, which aggregates node-level features from their neighbors through graph convolution operation and considers the element-level of interactions with their neighbors in the NI layer. Finally, the drug response predictions are made by calculating the linear correlation coefficients of feature representations of cell lines and drugs. We have conducted extensive experiments to assess the effectiveness of our model on Cancer Drug Sensitivity Data (GDSC) and Cancer Cell Line Encyclopedia (CCLE) datasets. It has achieved the best performance compared with the state-of-the-art algorithms, especially in predicting drug responses for new cell lines, new drugs and targeted drugs. Furthermore, our model that was well trained on the GDSC dataset can be successfully applied to predict samples of PDX and TCGA, which verified the transferability of our model from cell line in vitro to the datasets in vivo. Availability and implementation The source code can be obtained from https://github.com/weiba/NIHGCN. Supplementary information Supplementary data are available at Bioinformatics online.