Background: Heart failure (HF) is a major source of morbidity and mortality. Fluid retention and shortness of breath are its cardinal manifestations for which loop diuretics are used. Although their usefulness is well accepted, less is known about their role in improving clinical outcomes. Objectives: The purpose of this study was to determine the relationship between loop diuretics and clinical outcomes in patients with HF. Methods: Of the 25,345 older patients hospitalized for HF in the Medicare-linked OPTIMIZE-HF (Organized Program to Initiate Lifesaving Treatment in Hospitalized Patients with Heart Failure) registry, 9,866 (39%) received no pre-admission diuretics. The study excluded 1,083 patients receiving dialysis and 847 discharged on thiazide diuretics. Of the remaining 7,936 patients, 5,568 (70%) were prescribed loop diuretics at discharge. Using propensity scores for receipt of loop diuretics estimated for each of the 7,936 patients, a matched cohort of 2,191 pairs of patients was assembled balanced on 74 baseline characteristics. Hazard ratios (HRs) and 95% confidence intervals (CIs) for outcomes were estimated in the matched cohort. Results: Matched patients (n = 4,382) had a mean age of 78 years, 54% were women, and 11% were African American. The 30-day all-cause mortality occurred in 4.9% (107 of 2,191) and 6.6% (144 of 2,191) of patients in the loop diuretic and no loop diuretic groups, respectively (HR when the use of loop diuretics was compared with nonuse: 0.73; 95% CI: 0.57 to 0.94; p = 0.016). Patients in the loop diuretic group had a significantly lower risk of 30-day HF readmission (HR: 0.79; 95% CI: 0.63 to 0.99; p = 0.037) but not of 30-day all-cause readmission (HR: 0.89; 95% CI: 0.79 to 1.01; p = 0.081). None of the associations was statistically significant during 60 days of follow-up. Conclusions: Hospitalized older patients not taking diuretics prior to hospitalization for HF decompensation who received a discharge prescription for loop diuretics had significantly better 30-day clinical outcomes than those not discharged on loop diuretics. These findings provide new information about short-term clinical benefits associated with loop diuretic use in HF.