ABSTRACT: The objective of our study was to estimate direct healthcare costs incurred by a population-based sample of people with psychological distress or depression. We used the 2002 Canadian Community Health Survey on Mental Health and Well Being and categorized individuals as having psychological distress using the Kessler-6, major depressive disorder (MDD) using DSM-IV criteria and a comparison group of participants without MDD or psychological distress. Costs in 2013 USD were estimated by linking individuals to health administrative databases and following them until March 31, 2013. Our sample consisted of 9,965 individuals, of whom 651 and 409 had psychological distress and MDD, respectively. Although the age-and-sex adjusted per-capita costs were similarly high among the psychologically distressed ($3,364, 95% CI: $2,791, $3,937) and those with MDD ($3,210, 95% CI: $2,413, $4,008) compared to the comparison group ($2,629, 95% CI: $2,312, $2,945), the population-wide excess costs for psychological distress ($441 million) were more than twice that for MDD ($210 million) as there was a greater number of people with psychological distress than depression. We found substantial healthcare costs associated with psychological distress and depression, suggesting that psychological distress and MDD have a high cost burden and there may be public health intervention opportunities to relieve distress. Further research examining how individuals with these conditions use the healthcare system may provide insight into the allocation of limited healthcare resources while maintaining high quality care.