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Objectives: The purpose of the study was to develop a population-based simulation model of osteoarthritis (OA) in Canada that can be used to quantify the future health and economic burden of OA under a range of scenarios for changes in the OA risk factors and treatments. In this article we describe the overall structure of the model, sources of data, derivation of key input parameters for the epidemiological component of the model, and preliminary validation studies., Design: We used the Population Health Model (POHEM) platform to develop a stochastic continuous-time microsimulation model of physician-diagnosed OA. Incidence rates were calibrated to agree with administrative data for the province of British Columbia, Canada. The effect of obesity on OA incidence and the impact of OA on health-related quality of life (HRQL) were modeled using Canadian national surveys., Results: Incidence rates of OA in the model increase approximately linearly with age in both sexes between the ages of 50 and 80 and plateau in the very old. In those aged 50+, the rates are substantially higher in women. At baseline, the prevalence of OA is 11.5%, 13.6% in women and 9.3% in men. The OA hazard ratios for obesity are 2.0 in women and 1.7 in men. The effect of OA diagnosis on HRQL, as measured by the Health Utilities Index Mark 3 (HUI3), is to reduce it by 0.10 in women and 0.14 in men., Conclusions: We describe the development of the first population-based microsimulation model of OA. Strengths of this model include the use of large population databases to derive the key parameters and the application of modern microsimulation technology. Limitations of the model reflect the limitations of administrative and survey data and gaps in the epidemiological and HRQL literature., (Copyright 2009 Osteoarthritis Research Society International. All rights reserved.)