Inhaled corticosteroids are often used to manage chronic obstructive pulmonary disease, although the evidence regarding their long-term efficacy in preventing or reducing adverse health outcomes is not definitive. This retrospective cohort study analyzed whether regular inhaled corticosteroid use is associated with reduced health care utilization and all-cause mortality related to chronic obstructive pulmonary disease. Subjects were 2,902 health maintenance organization members aged 50 and over who met criteria for chronic obstructive pulmonary disease. The study used a composite endpoint of time to (1) death or (2) hospitalization or emergency room care related to chronic obstructive pulmonary disease, whichever occurred first, during a 4-year follow-up. Among the 42% of chronic obstructive pulmonary disease patients with an indication of co-morbid asthma, inhaled corticosteroid use was associated with significantly reduced risk for both all-cause mortality and the composite outcome. The reduction in risk was greatest in never- and ex-smokers. Among chronic obstructive pulmonary disease patients with no indication of asthma, inhaled corticosteroid use was associated with reduced risk only in never smokers. These findings generally persisted in separate analyses stratified by asthma status and in sensitivity analyses using four alternative definitions of regular medication use, with comparable results when regular medication use was treated as a fixed covariate defined at the start of follow-up. We conclude that use of inhaled corticosteroids was associated with reduced risk of chronic obstructive pulmonary disease exacerbations and all-cause mortality. This benefit was most pronounced among never-smokers and in those with evidence of co-morbid asthma.