The survival benefit radical prostatectomy compared to observation in men with localised prostate cancer has been shown in two randomised trials primarily including men diagnosed in the 1990s. In more recent years, changes in work-up and histopathological assessments of prostate biopsies have changed, which has led to stage and grade migration. The aim of this study was to assess temporal trends in survival for men diagnosed with favourable-risk prostate cancer managed with radical prostatectomy or observation. We included men aged 75 or younger with Charlson Comorbidity index 0-1 diagnosed with favourable-risk prostate cancer (T1-T2, PSA <20 ng/mL and Gleason score 6 or 7 [3+4]) in the period 2000-2016 who underwent radical prostatectomy (n = 18 765) or observation (n = 21 149). Following propensity score matching, 9 664 men were selected in each treatment strategy. In more recent calendar periods, the absolute risk of prostate cancer death declined for both treatments. The absolute survival benefit of immediate radical prostatectomy compared to initial observation decreased: in men with low-risk prostate cancer the absolute difference was 1% in 2000-2005, 0.2% in 2006-2010, and 0.4% in 2011-2016 and for men with intermediate-risk prostate cancer 1.1% in 2000-2005, 0.6% in 2005-2010, and 0.7% in 2011-2016.