Abstract Background The risk factors for hypoglycemia during hospital admission and its consequences in patients with diabetes are not entirely known. The present study aimed to investigate the risk factors for hypoglycemia, as well as the potential implications of hypoglycemia in patients with type 2 diabetes mellitus admitted to the hospital. Methods This retrospective cohort study included 324 patients (214 [66.0%] men; median age 70 years, range 34–95 years) with type 2 diabetes admitted to a university hospital who were consulted the Endocrinology Department for glycemic control during a 12-month period. We investigated the potential role of demographic factors, metabolic factors, therapy, and comorbidities on the development of in-hospital hypoglycemia. We explored the prognostic value of hypoglycemia on mortality (both in-hospital and in the long-term), hospital readmission in the following year, and metabolic control (HbA1c value) after discharge (median follow-up, 886 days; range 19–1255 days). Results Hypoglycemia occurred in 154 (47.5%) patients during their hospitalization and was associated with advanced age, previous insulin therapy, higher Charlson Comorbidity Index, lower body mass index and lower baseline HbA1c values. Hypoglycemia was associated with greater in-hospital and long-term mortality, longer hospital stays, higher readmission rates, and poorer metabolic control after discharge. These negative consequences of hypoglycemia were more frequent in patients with severe (≤ 55 mg/dL) hypoglycemia and in patients who had hypoglycemia during a greater percentage of hospitalization days. Conclusions Hypoglycemia during hospital admission is a marker of a poor prognosis in patients with type 2 diabetes.