Hospital-acquired hyponatremia can be lethal. There have been multiple reports of death or permanent neurological impairment in both children and adults. The main factor contributing to the development of hospital-acquired hyponatremia is routine use of hypotonic fluids in patients in whom the excretion of free water, which is retained in response to excess arginine vasopressin (AVP), might be impaired. The practice of administering hypotonic parental fluids was established over 50 years ago, before recognition of the fact that there are numerous potential stimuli for AVP production in most hospitalized patients. Virtually all neurological morbidity resulting from hospital-acquired hyponatremia has been associated with administration of hypotonic fluids. Multiple prospective studies have shown that 0.9% NaCl is effective prophylaxis against hyponatremia. There is not a single report in the literature of neurological complications resulting from the use of 0.9% NaCl in non-neurosurgical patients. Patients at greatest risk of developing hyponatremic encephalopathy following hypotonic fluid administration are children, premenopausal females, postoperative patients, and those with brain injury or infection, pulmonary disease or hypoxemia. When hyponatremic encephalopathy develops, immediate administration of 3% NaCl is essential. In this Review, we discuss the question of why administering hypotonic fluids is unphysiologic and potentially dangerous, the settings in which isotonic fluids should be administered to prevent hyponatremia, and the appropriate treatment of hyponatremic encephalopathy.