The objectives of this study were to estimate life expectancy (LE) and health-adjusted life expectancy (HALE) for Canadians with and without diabetes and to evaluate the impact of diabetes on population health using administrative and survey data. Mortality data from the Canadian Chronic Disease Surveillance System (2004 to 2006) and Health Utilities Index data from the Canadian Community Health Survey (2000 to 2005) were used. Life table analysis was applied to calculate LE, HALE, and their confidence intervals using the Chiang and the adapted Sullivan methods. LE and HALE were significantly lower among people with diabetes than for people without the disease. LE and HALE for females without diabetes were 85.0 and 73.3 years, respectively (males: 80.2 and 70.9 years). Diabetes was associated with a loss of LE and HALE of 6.0 years and 5.8 years, respectively, for females, and 5.0 years and 5.3 years, respectively, for males, living with diabetes at 55 years of age. The overall gains in LE and HALE after the hypothetical elimination of prevalent diagnosed diabetes cases in the population were 1.4 years and 1.2 years, respectively, for females, and 1.3 years for both LE and HALE for males. The results of the study confirm that diabetes is an important disease burden in Canada impacting the female and male populations differently. The methods can be used to calculate LE and HALE for other chronic conditions, providing useful information for public health researchers and policymakers.