Objectives The aim of the study was to develop and validate an updated morbidity index for short-term mortality risk, using chronic conditions identified from routine hospital admission ICD-10 data. Study Design and Setting Retrospective cohort study of all adult New Zealand (NZ) residents at January 1, 2012. Adult NZ residents aged 18 years and over, defined by enrollment with a Primary Healthcare Organisation or accessing public health care in preceding year. Data were split into two data sets for index development (70%, n = 2,331,645) and validation (30%, n = 1,000,166). Results The M3 index was constructed using log hazard ratios for 1-year mortality modeled from presence of 61 chronic conditions. Validation results were improved for the M3 index for predicting 1-year mortality compared to Charlson and Elixhauser on the c-statistic (M3: 0.931, Charlson: 0.921, Elixhauser: 0.922; difference M3 vs. Charlson = 0.010, 95% confidence interval [CI]: 0.008, 0.012; M3 vs. Elixhauser = 0.009, 95% CI: 0.007, 0.012) and integrated discriminative improvement (M3 vs. Charlson = 0.024, 95% CI: 0.021, 0.026; M3 vs. Elixhauser = 0.024, 95% CI: 0.022, 0.027). Conclusion The M3 index had improved predictive performance for 1-year mortality risk over Charlson and Elixhauser indices, allowing better adjustment for mortality risk from chronic conditions. This provides an important tool for population-level analyses of health outcomes.