Background: Digoxin reduces the risk of heart failure hospitalization but has no effect on mortality in patients with heart failure without atrial fibrillation in the randomized controlled trial setting. Observational studies of digoxin use in patients with atrial fibrillation have suggested a higher risk for poor outcomes. Less is known about this association in patients with heart failure and atrial fibrillation, the examination of which was the objective of the current study. Methods: We conducted an observational propensity score-matched study of predischarge digoxin initiation in 1768 hospitalized patients with heart failure and atrial fibrillation in the Medicare-linked Organized Program to Initiate Lifesaving Treatment in Hospitalized Patients with Heart Failure (OPTIMIZE-HF) registry, balanced on 56 baseline characteristics (mean age, 79 years; 55% women; 7% African American). Hazard ratios (HRs) and 95% confidence intervals (CIs) for outcomes were estimated for the 884 patients initiated on digoxin compared with 884 not initiated on digoxin. Results: HRs (95% CIs) for 30-day, 2-year, and 4-year all-cause mortality were 0.80 (0.55-1.18; P =. 261), 0.94 (0.87-1.16; P =. 936), and 1.01 (0.90-1.14; P =. 729), respectively. Respective HRs (95% CIs) for heart failure readmission were 0.67 (0.49-0.92; P = .014), 0.81 (0.69-0.94; P = .005), and 0.85 (0.74-0.97; P = .022), and those for all-cause readmission were 0.78 (0.64-0.96; P = .016), 0.90 (0.81-1.00; P = .057), and 0.91 (0.83-1.01; P =. 603). These associations were homogeneous between patients with left ventricular ejection fraction ≤45% vs >45%. Conclusions: Among hospitalized older patients with heart failure (HFrEF and HFpEF) and atrial fibrillation, initiation of digoxin was associated with a lower risk of heart failure readmission but had no association with mortality.