OBJECTIVES:  Multiple Sclerosis (MS), a long term neurodegenerative disease that has a substantial effect on morbidity and mortality, as well as being a major economic burden to patients and society. Our aim was to quantify life expectancy (LE), quality adjusted life years (QALYs) and total lifetime costs for a typical cohort of Australian people with MS. METHODS:  A 4-state Markov model simulated progression from mild disability to moderate and severe disability and death for a cohort of 35 year old women starting with mild disability over a lifetime horizon. Risks of death were calculated from Australian life tables, adjusted by increasing disability severity. State-dependent relapse probabilities and their associated disutilities were accounted for. The probabilities of MS progression and relapses were estimated from Auslong and TASMSL MS epidemiological databases. Direct and indirect societal costs (2016 Australian dollars (AUD)) and health state utility values for each state were derived from the Australian MS Longitudinal Study. Probabilistic sensitivity analysis sampling from key input parameter distributions was performed. Costs were discounted at 5% annually. RESULTS:  Mean (standard deviation) LE from age 35 years was 43.5 (0.3) years. This was 6.7 years less than for the Australian general population. QALYs were 29.5 (0.6) years, a loss of 12.3 years compared with the general population. Discounted total lifetime costs were AUD 940,434 (31,952) per person. CONCLUSIONS:  We have developed a health economics model of the progression of MS, allowing us to calculate the impact of MS on life expectancy, QALYs and total lifetime costs in Australia. LE and QALYs were substantially decreased in comparison to general population norms due to relapses and progressive disability associated with MS, with correspondingly huge lifetime costs. This model will form the basis for future cost-effectiveness analyses of interventions that reduce relapses and progression of disability resulting from MS.