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Background: Links between thyroid function and depression have been noted in many contexts. We assessed whether hospitalization with hypothyroidism was a risk factor for developing affective disorder. Methods: We conducted a prospective cohort study using historical data from Danish registers. The observational period was 1977–1999. Three study cohorts were identified: all patients with a first hospital admittance with the resulting index discharge diagnoses hypothyroidism, osteoarthritis, or nontoxic goiter. A later hospitalization with a resulting discharge diagnosis of affective disorder was used as event of interest, and rates of readmission were estimated and compared using competing risk models in survival analyses. Findings: We identified 165,307 patients discharged with an index diagnosis. In the observational period, 1041 events occurred. An index diagnosis of hypothyroidism was associated with an increased risk of hospitalization with affective disorder when compared to the control diseases. The risk of hospitalization with affective disorder was greatest in the first year after index hospitalization. Conclusion: Patients hospitalized with hypothyroidism have a greater risk of readmission with depression or bipolar disorder than control patients. This renders epidemiologic support to theories linking thyroid dysfunction with mood disturbances.