Objectives To quantify the risk of overdiagnosis associated with prostate cancer screening in Australia using a novel lifetime risk approach. Design Modelling and validation of the lifetime risk method using publicly available population data. Setting Opportunistic screening for prostate cancer in the Australian population. Participants Australian male population (1982-2012). Interventions Prostate-specific antigen testing for prostate cancer screening. Primary and secondary outcome measures Primary: Lifetime risk of overdiagnosis in 2012 (excess lifetime cancer risk adjusted for changing competing mortality); Secondary: Lifetime risk of prostate cancer diagnosis (unadjusted and adjusted for competing mortality); Excess lifetime risk of prostate cancer diagnosis (for all years subsequent to 1982). Results The lifetime risk of being diagnosed with prostate cancer increased from 6.1% in 1982 (1 in 17) to 19.6% in 2012 (1 in 5). Using 2012 competing mortality rates, the lifetime risk in 1982 was 11.5% (95% CI 11.0% to 12.0%). The excess lifetime risk of prostate cancer in 2012 (adjusted for changing competing mortality) was 8.2% (95% CI 7.6% to 8.7%) (1 in 13). This corresponds to 41% of prostate cancers being overdiagnosed. Conclusions Our estimated rate of overdiagnosis is in agreement with estimates using other methods. This method may be used without the need to adjust for lead times. If annual (cross-sectional) data are used, then it may give valid estimates of overdiagnosis once screening has been established long enough for the benefits from the early detection of non-overdiagnosed cancer at a younger age to be realised in older age groups.