A population-based study using validated algorithms to estimate the costs of treating people with chronic disease with and without mental health disorders is needed. To determine the association of mental health disorders with health care costs among people with chronic diseases. This population-based cohort study in the Canadian province of Alberta collected data from April 1, 2012, to March 31, 2015, among 991 445 adults 18 years and older with a chronic disease (ie, asthma, congestive heart failure, myocardial infarction, diabetes, epilepsy, hypertension, chronic pulmonary disease, or chronic kidney disease). Data analysis was conducted from October 2017 to August 2018. Mental health disorder (ie, depression, schizophrenia, alcohol use disorder, or drug use disorder). Resource use, mean total unadjusted and adjusted 3-year health care costs, and mean total unadjusted 3-year costs for hospitalization and emergency department visits for ambulatory care-sensitive conditions. Among 991 445 participants, 156 296 (15.8%) had a mental health disorder. Those with no mental health disorder were older (mean [SD] age, 58.1 [17.6] years vs 55.4 [17.0] years; P < .001) and less likely to be women (50.4% [95% CI, 50.3%-50.5%] vs 57.7% [95% CI, 57.4%-58.0%]; P < .001) than those with mental health disorders. For those with a mental health disorder, mean total 3-year adjusted costs were $38 250 (95% CI, $36 476-$39 935), and for those without a mental health disorder, mean total 3-year adjusted costs were $22 280 (95% CI, $21 780-$22 760). Having a mental health disorder was associated with significantly higher resource use, including hospitalization and emergency department visit rates, length of stay, and hospitalization for ambulatory care-sensitive conditions. Higher resource use by patients with mental health disorders was not associated with health care presentations owing to chronic diseases compared with patients without a mental health disorder (chronic disease hospitalization rate per 1000 patient days, 0.11 [95% CI, 0.11-0.12] vs 0.06 [95% CI, 0.06-0.06]; P < .001; overall hospitalization rate per 1000 patient days, 0.88 [95% CI, 0.87-0.88] vs 0.43 [95% CI, 0.43-0.43]; P < .001). This study suggests that mental health disorders are associated with substantially higher resource utilization and health care costs among patients with chronic diseases. These findings have clinical and health policy implications.