The population exposure to NO2 in ambient air for the year 2005 has been quantified (annual and daily mean concentrations) and the health and associated economical consequences have been calculated based on these results. Almost 50% of the population were exposed to annual mean NO2 concentrations of less than 5 µg/m3. A further 30% were exposed to concentration levels between 5-10 µg NO2/m3, and only about 5% of the Swedish inhabitants experienced exposure levels above 15 NO2 µg/m3. Using 10 µg/m3 as a lower cut off for long-term exposure we estimate that concentations of NO2 in urban air resulted in more than 3200 excess deaths per year. Almost 600 of these could have been avoided if annual mean concentrations above the environmental goal 20 µg/m3 did not exist. Most excess deaths are estimated to occur due to annual levels in the range of 10-15 µg/m3. In addition we estimated more than 300 excess hospital admissions for all respiratory disease and almost 300 excess hospital admissions for cardiovascular disease due to the short-term effect of levels above 10 µg/m3. The results suggest that the health effects related to annual mean levels of NO2 higher than 10 µg/m3 can be valued to annual socio-economic costs of 18.5 billion Swedish crowns. These 18.5 billion Swedish crowns are to be considered as welfare losses. However, only 18 % of these costs are related to exceedance of the Swedish long term environmental objectives for NO2. The other 82 % of the costs are taken by the larger part of the Swedish population that are exposed to medium levels of NO2. This displacement in the distribution of the social costs indicates that the most cost effective abatement strategy for Sweden might be to reduce medium annual levels of NO2 rather than only focusing on abatement measures directed towards the highest annual mean levels.