Background: Pulmonary hypoplasia is associated with reduced lung function in infancy. The aim of this study was to evaluate the hypothesis that children exposed to oligohydramnios display an increased risk of hospitalization for respiratory illness by using a population-based matched-cohort design. Methods: We used three nationwide population-based data sets to identify 5,228 women who gave birth during 2004 to 2007 and were diagnosed with oligohydramnios during the third trimester of pregnancy. A cohort of 20,912 unaffected pregnant women was matched with these cases, according to neonatal sex and gestational age, maternal age and education, and level of prenatal care. Respiratory hospitalization and respiratory failure were defined using discharge diagnostic codes. Results: Oligohydramnios-exposed children had an 8% higher incidence rate of respiratory hospitalization and an 80% higher incidence rate of respiratory failure, compared with children without oligohydramnios exposure. This risk remained after adjusting for all potential risk factors. Cox regression analyses indicated that the adjusted hazard ratios of respiratory hospitalization and respiratory failure were 1.07 (95% confidence interval (CI): 1.01-1.15; P = 0.030) and 2.20 (95% CI: 1.26-3.84; P = 0.005), respectively. Conclusion: Children exposed to oligohydramnios during the third trimester of pregnancy display an increased risk of hospitalization for respiratory illness.