OBJECTIVES: Previous studies have linked state-level income inequality to mortality rates. However, it has been questioned whether the relationship is independent of individual-level income. The present study tests whether state-level income inequality is related to individual mortality risk, after adjustment for individual-level characteristics. METHODS: In this prospective, multilevel study design, the vital status of National Health Interview Survey (NHIS) respondents was ascertained by linkage to the National Death Index, with additional linkage of state-level data to individuals in the NHIS. The analysis included data for 546,888 persons, with 19,379 deaths over the 8-year follow-up period. The Gini coefficient was used as the measure of income inequality. RESULTS: Individuals living in high-income-inequality states were at increased risk of mortality (relative risk = 1.12; 95% confidence interval = 1.04, 1.19) compared with individuals living in low-income-inequality states. In stratified analyses, significant effects of state income inequality on mortality risk were found, primarily for near-poor Whites. CONCLUSIONS: State-level income inequality appears to exert a contextual effect on mortality risk, after income is adjusted for, providing further evidence that the distribution of income is important for health.