In late 1997, Friels was diagnosed with pancreatic cancer. However, his treatment was successful, and he is one of the very few sufferers of this disease to go into long-term remission. During his treatment he continued to work on the set of "Water Rats", until eventually the impact of the chemotherapy stopped him working, and he chose to have his character written out of the series by sending him on a sailing journey around the world. At this time, however, he also continued his stage work, and was performing in Sydney Theatre Company's "Macbeth".