To estimate the rate of new chronic benzodiazepine use after hospitalization in older adults not previously prescribed with benzodiazepines. Retrospective cohort study using linked, population-based administrative data. Ontario, Canada between April 1, 1992 and March 31, 2005. Community-dwelling seniors who had not been prescribed benzodiazepine drugs in the year before hospitalization were selected from all 1.4 million Ontario residents aged 66 years and older. New chronic benzodiazepine users, defined as initiation of benzodiazepines within 7 days after hospital discharge and an additional claim within 8 days to 6 months. We used multivariate logistic regression to examine for the effect of hospitalization on the primary outcome after adjusting for confounders. There were 405,128 patient hospitalizations included in the cohort. Benzodiazepines were prescribed to 12,484 (3.1%) patients within 7 days of being discharged from hospital. A total of 6,136 (1.5%) patients were identified as new chronic benzodiazepine users. The rate of new chronic benzodiazepine users decreased over the study period from 1.8% in the first year to 1.2% in the final year (P < .001). Multivariate logistic regression found that women, patients admitted to the intensive care unit or nonsurgical wards, those with longer hospital stays, higher overall comorbidity, a prior diagnosis of alcoholism, and those prescribed more medications had significantly elevated adjusted odds ratios for new chronic benzodiazepine users. Older individuals had a lower risk for the primary outcome. New benzodiazepine prescription after hospitalization occurs frequently in older adults and may result in chronic use. A systemic effort to address this risky practice should be considered.