OBJECTIVES: This article examines the link between stressful life events and illness by considering both onset and reoccurrence of chronic illnesses. Using longitudinal data, we estimate the extent to which life events increase the likelihood of depression or anxiety, type 2 diabetes, cancer, coronary heart disease, circulatory disease, asthma and emphysema among Australian adults aged ≥21 years. METHODS: Longitudinal data were obtained from the nationally representative Household, Income and Labour Dynamics in Australia panel survey collected at waves 3 (2003), 7 (2007) and 9 (2009). Participants (N = 9222) answered life events questions relating to the preceding 12 months and chronic illnesses lasting (or expected to last for) 6 months. Weighted pooled and random effects logistic regressions were performed, controlling for confounders and previous illness, and also performed on subsamples delineated by reported illnesses in wave 3. RESULTS: Work-related stress [odds ratio (OR) = 1.54, P < 0.001] was positively associated with the onset of depression or anxiety. Personal stress increased the likelihood of the onset of depression or anxiety (OR = 1.70, P < 0.001), type 2 diabetes (OR = 1.47, P < 0.05) and circulatory diseases (OR = 1.72, P < 0.05), while family-related stress increased the likelihood of the onset of heart (OR = 1.32, P < 0.01) and circulatory diseases (OR = 1.32, P < 0.05). CONCLUSIONS: Independent of personal characteristics and key health measures (body mass index, hypertension and disability), these findings suggest that work-related, personal and family-related stressful life events contribute to the development and/or course of chronic diseases.