OBJECTIVE To compare the risks of severe hypoglycemia and mortality between patients with type 2 diabetes (T2D) and discharged with and without acute liver injury. RESEARCH DESIGN AND METHODS From 1 January 2000 to 31 December 2010, we identified patients with T2D and hospitalization for acute liver injury and hospitalization for other causes from the National Health Insurance Research Database of Taiwan. Multivariable-adjusted Cox proportional hazards models were used to compare the risks of severe hypoglycemia and mortality between the study and control groups. RESULTS The incidence rates and adjusted hazard ratios (aHRs) for severe hypoglycemia within 90 days and 365 days after discharge were 12.28 and 5.59/1,000 person-years (aHR 1.92 [1.30–2.85]) and 7.35 and 2.9/1,000 person-years (aHR 1.98 [1.52–2.58]) for patients discharged with and without acute liver injury, respectively. The incidence rates and aHRs for mortality within 90 days and 365 days after discharge were 82.4 and 27.54/1,000 person-years (aHR 1.73 [1.46–2.05]) and 36.8 and 9.3/1,000 person-years (aHR 1.94 [1.69–2.24]) for patients discharged with and without acute liver injury, respectively. The subgroup analysis of hypoglycemia risk in patients discharged with acute liver injury revealed no significant interaction in risk factors of age, chronic kidney disease, and medications, except for sex difference, which has significant interaction. CONCLUSIONS This cohort study demonstrated that patients with T2D and discharged with acute liver injury showed significantly higher risks of severe hypoglycemia and mortality within 90 days and 365 days after discharge than patients discharged with other causes.