Abstract Background Hydroxychloroquine has not been associated with improved survival among hospitalized COVID-19 patients in the majority of observational studies and similarly was not identified as an effective prophylaxis following exposure in a prospective randomized trial. We aimed to explore the role of hydroxychloroquine therapy in mildly symptomatic patients diagnosed in the outpatient setting. Methods We examined the association between outpatient hydroxychloroquine exposure and the subsequent progression of disease among mildly symptomatic non-hospitalized patients with documented SARS-CoV-2 infection. The primary outcome assessed was requirement of hospitalization. Data was obtained from a retrospective review of electronic health records within a New Jersey USA multi-hospital network. We compared outcomes in patients who received hydroxychloroquine with those who did not applying a multivariable logistic model with propensity matching. Results Among 1274 outpatients with documented SARS-CoV-2 infection 7.6% were prescribed hydroxychloroquine. In a 1067 patient propensity matched cohort, 21.6% with outpatient exposure to hydroxychloroquine were hospitalized, and 31.4% without exposure were hospitalized. In the primary multivariable logistic regression analysis with propensity matching there was an association between exposure to hydroxychloroquine and a decreased rate of hospitalization from COVID-19 (OR 0.53; 95% CI, 0.29, 0.95). Sensitivity analyses revealed similar associations. QTc prolongation events occurred in 2% of patients prescribed hydroxychloroquine with no reported arrhythmia events among those with data available. Conclusions In this retrospective observational study of SARS-CoV-2 infected non-hospitalized patients hydroxychloroquine exposure was associated with a decreased rate of subsequent hospitalization. Additional exploration of hydroxychloroquine in this mildly symptomatic outpatient population is warranted.