The objective of this study was to investigate the effect of inbreeding depression on functional herd life in the South African Jersey population based on individual level and rate of inbreeding. A pedigree file of the South African Jersey breed (n = 912 638) was obtained from the Integrated Registration and Genetic Information System (INTERGIS). The data included registered, grade and imported animals. The percentages of animals in the pedigree file with two, one and zero parents unknown were 22%, 18% and 60%, respectively. The inbreeding coefficient for each animal (Fi) and the rate of individual inbreeding (ΔFi) as an alternative measure of inbreeding that is adjusted for the depth of known pedigree were calculated. The effect of inbreeding on functional herd life in each of the first three lactations was estimated, using a single-trait sire model on data collected from 1985 to 2003. Three analyses for survival in each of the first three lactations were conducted. In the first analysis, in addition to fixed and random effects, an individual inbreeding coefficient (Fi) was fitted as a linear covariate. In the second analysis, the inbreeding coefficient was included as a discrete variable with the following classes of inbreeding: 0 < F ≤ 3.125, 3.125 < F ≤ 6.25, 6.25 < F ≤ 12.5 and F > 12.5. In the third analysis, the individual rate of inbreeding (ΔFi) was included in the model as a linear covariate. The level of inbreeding in the SA Jersey population showed a gradual increase for the period 1985 to 1994, while the period 1995 to 2003 showed a rapid increase. The current mean level of inbreeding (for the year 2010) is 4.85% with a minimum and maximum of 0 and 31.34%, respectively. The rate of inbreeding showed a gradual increase from 0.36% to 0.43% between 1985 and 2003. The average rate of inbreeding is currently (for the year 2010) at 0.55%. There was a significant unfavourable relationship between inbreeding and functional herd life in the first and second lactations. The effect of inbreeding was more pronounced in the second lactation for both measures of inbreeding. Based on the current level of inbreeding, the reduction in functional herd life in the first lactation can be estimated as 0.68%. The corresponding estimate for the second lactation is 1.70%. The results from the current study indicate that the current level or rate of inbreeding has reached levels that are detrimental to functional herd life. Therefore, individual inbreeding coefficients should be considered in addition to genetic merit when breeding decisions are made by Jersey breeders.