OBJECTIVE: To analyse the association between area income inequality and mortality after adjustment for individual income and other established risk factors. DESIGN: Analysis of pooled data from two cohort studies. The relation between income inequality in small areas of residence (parishes) and individual mortality was examined with Cox proportional hazard analyses. SETTING: Two population studies conducted in Copenhagen, Denmark. PARTICIPANTS: 13 710 women and 12 018 men followed for a mean of 12.8 years. MAIN OUTCOME MEASURE: All cause mortality. RESULTS: Age standardised mortality was highest in the parishes with the least equal income distribution. After adjustment for individual risk factors, parish income inequality was not associated with mortality, whereas individual household income was. Thus, individuals in the highest income quarter had lower mortality than those in the lowest quarter (adjusted hazard ratio for men 0.51 (95% confidence interval 0.45 to 0.59) and for women 0.60 (0.54 to 0.68)). CONCLUSION: Area income inequality is not in itself associated with all cause mortality in this Danish population. Adjustment for individual risk factors makes the apparent effect disappear. This may be the result of Denmark's welfare system, based on a Nordic model.