The aim of this work was to estimate the life expectancy (LE) and disability-free life expectancy (DFLE) for adults with and without diabetes.The Chiang method and the adapted Sullivan method were used to estimate LE and DFLE by age and sex. Mortality data in 2011 were available from the National Diabetes Services Scheme for diabetes and from standard national mortality datasets for the general population. Data on prevalence of disability and severe or profound core activity limitation were derived from the 2012 Australian Survey of Disability, Ageing and Carers (SDAC). The definitions of disability used in the SDAC followed the International Classification of Functioning, Disability and Health. Data on diabetes prevalence were derived from the Australian Diabetes, Obesity and Lifestyle study.The estimated LE and DFLE (with 95% uncertainty interval [UI]) at age 50 years were 30.2 (30.0, 30.4) and 12.7 (11.5, 13.7) years, respectively, for men with diabetes, and the estimates were 33.9 (33.6, 34.1) and 13.1 (12.3, 13.9) years, respectively, for women with diabetes. The estimated loss of LE associated with diabetes at age 50 years was 3.2 (3.0, 3.4) years for men and 3.1 (2.9, 3.4) years for women, as compared with their counterparts without diabetes. The corresponding estimated loss of DFLE was 8.2 (6.7, 9.7) years for men and 9.1 (7.9, 10.4) years for women. Women with diabetes spent a greater number of absolute years and a greater proportion of their life with disability as compared with men with diabetes and women without diabetes. The gains in LE and DFLE across the whole population at age 50 years after hypothetically eliminating diagnosed diabetes were 0.6 (0.5, 0.6) years and 1.8 (1.0, 2.8) years.In adults, diabetes results in a modest reduction in LE and a substantial reduction in DFLE. Efforts to identify the specific causes of disability and effective interventions are needed.