Abstract Background Chronic psychological stress may pose a serious threat to health, although the mechanisms are not fully understood. This study examines the impact of stress on modifiable lifestyle factors, depressive symptoms, health-related quality of life (HRQOL) and chronic illness in older Australian women. Methods Cross-sectional data were collected from a random sample of 181 older adults aged 60 to 70 years from rural and urban areas of South-East Queensland, Australia. We used structural equation modelling to examine associations between stress, modifiable lifestyle factors, HRQOL, and chronic illness. Findings Parameter estimates show that older women who reported life stressors where they felt helpless and feared for their life (high-magnitude stressors) also reported higher body mass index (p = .03) and more chronic illness (p < .01). In contrast, duration of exposure to life stressors was associated with higher depressive symptom scores (Center for Epidemiologic Studies Depression Scale; p = .02) and sleep disturbance scores (p < .01). Conclusions Our findings support the link between traumatic personal histories (exposure to high-magnitude stressors) and unhealthy lifestyle factors. Findings highlight the need for more research on how stress reduction, a healthy lifestyle, and positive coping strategies can be used to reduce the effects of high-magnitude stress on HRQOL and chronic illness.