Researchers from the University College London tracked the psychological well-being of 10,000 people aged 50 to 100 over nine years as part of the university's English Longitudinal Study of Ageing.
The team said the effects were "large" and independent of age, sex and wealth, the BBC News reported.
Happiness could be used to spot people at risk of ill health, they added.
The researchers interviewed the participants three times between 2002 and 2011, assessing them using three measures of psychological well-being and testing their enjoyment of life with a series of questions.
The study found that those recorded as having the greatest enjoyment of life at first interview were more likely than other participants to still be alive nine or 10 years later.
"The difference between those who enjoyed life the most and those who enjoyed life the least was marked, with nearly three times more people dying in the lower than greater enjoyment group," the study said.
"What we have found is over a nine year period that about 20 per cent of people will pass away during this time," Professor Andrew Steptoe, who led this part of the research, said.
"What we found is that out of those people in the highest third of people with the most enjoyment, 9.9 per cent died. Of people in the lowest third of enjoyment 28.8 per cent of them died," he said.
"This was the case even when factors such as age were taken into account, we still find this protective effect of enjoyment," he added.
Steptoe said this could be happening because the kind of people who are happy are the kind who take care of themselves and are therefore quite healthy.
He also suggested that people of a happy disposition were less stressed.