Currently, separate measures are used to estimate the impact of animal diseases on mortality and animal welfare. This article introduces a novel metric, the Welfare-Adjusted Life Year (WALY), to estimate disease impact by combining welfare compromise and premature death components. Adapting the Disability-Adjusted Life Year approach used in human health audits, we propose WALY as the sum of a) the years lived with impaired welfare due to a particular cause and b) the years of life lost due to the premature death from the same cause. The years lived with impaired welfare are the product of the average duration of each welfare impediment, reflecting the actual condition that compromises animal welfare, the probability of an incident case developing and impaired welfare weights, representing the degree of impaired welfare. The years of life lost are calculated using the standard expected lifespan at the time of premature death. To demonstrate the concept, we estimated WALYs for 10 common canine diseases, namely mitral valve disease, dilated cardiomyopathy, chronic kidney disease, diabetes mellitus, atopic dermatitis, splenic haemangiosarcoma, appendicular osteosarcoma, cranial cruciate ligament disease, thoracolumbar intervertebral disc disease and cervical spondylomyelopathy. A survey of veterinarians (n = 61) was conducted to elicit impaired welfare weights for 35 welfare impediments. Paired comparison was the primary method to elicit weights, whereas visual analogue scale and time trade-off approaches rescaled these weights onto the desired scale, from 0 (the optimal welfare imaginable) to 1 (the worst welfare imaginable). WALYs for the 10 diseases were then estimated using the impaired welfare weights and published epidemiological data on disease impacts. Welfare impediment "amputation: one limb" and "respiratory distress" had the lowest and highest impaired welfare weights at 0.134 and 0.796, rescaled with a visual analogue scale, and 0.117 and 0.857, rescaled with time trade-off. Among the 10 diseases, thoracolumbar intervertebral disc disease and atopic dermatitis had the smallest and greatest adverse impact on dogs with WALYs at 2.83 (95% UI: 1.54-3.94) and 9.73 (95% uncertainty interval [UI]: 7.17-11.8), respectively. This study developed the WALY metric and demonstrated that it summarises welfare compromise as perceived by humans and total impact of diseases in individual animals. The WALY can potentially be used for prioritisation of disease eradication and control programs, quantification of population welfare and longitudinal surveillance of animal welfare in companion animals and may possibly be extended to production animals.