This study examined whether the number of teeth contributes to the compression of morbidity, measured as a shortening of life expectancy with disability, an extension of healthy life expectancy, and overall life expectancy. A prospective cohort study was conducted. A self-reported baseline survey was given to 126,438 community-dwelling older people aged ≥65 y in Japan in 2010, and 85,161 (67.4%) responded. The onset of functional disability and all-cause mortality were followed up for 1,374 d (follow-up rate = 96.1%). A sex-stratified illness-death model was applied to estimate the adjusted hazard ratios (HRs) for 3 health transitions (healthy to dead, healthy to disabled, and disabled to dead). Absolute differences in life expectancy, healthy life expectancy, and life expectancy with disability according to the number of teeth were also estimated. Age, denture use, socioeconomic status, health status, and health behavior were adjusted. Compared with the edentulous participants, participants with ≥20 teeth had lower risks of transitioning from healthy to dead (adjusted HR, 0.58 [95% confidence interval (CI), 0.50-0.68] for men and 0.70 [95% CI, 0.57-0.85] for women) and from healthy to disabled (adjusted HR, 0.52 [95% CI, 0.44-0.61] for men and 0.58 [95% CI, 0.49-0.68] for women). They also transitioned from disabled to dead earlier (adjusted HR, 1.26 [95% CI, 0.99-1.60] for men and 2.42 [95% CI, 1.72-3.38] for women). Among the participants aged ≥85 y, those with ≥20 teeth had a longer life expectancy (men: +57 d; women: +15 d) and healthy life expectancy (men: +92 d; women: +70 d) and a shorter life expectancy with disability (men: -35 d; women: -55 d) compared with the edentulous participants. Similar associations were observed among the younger participants and those with 1 to 9 or 10 to 19 teeth. The presence of remaining teeth was associated with a significant compression of morbidity: older Japanese adults' life expectancy with disability was compressed by 35 to 55 d within the follow-up of 1,374 d.