Background: Patients frequently report antibiotic allergies; however, only 10% of labelled patients have a true allergy. Aim: We investigated the documentation of antibiotic ‘allergy’ labels (AAL) and the effect of labelling on clinical outcomes, in a West Australian adult tertiary hospital. Methods: Retrospective cross-sectional analysis of patients captured in the 2013 and 2014 National Antimicrobial Prescribing Surveys was carried out. Data were collected on documented antibiotic adverse drug reactions, antibiotic cost, prescribing appropriateness, prevalence of multi-drug resistant organisms, length of stay, intensive care admission and readmissions. Results: Of the 687 patients surveyed, 278 (40%) were aged 70 or above, 365 (53%) were male and 279 (41%) were prescribed antibiotics. AAL were recorded in 122 (18%) patients and the majority were penicillin labels (n = 87; 71%). Details of AAL were documented for 80 of 141 (57%) individual allergy labels, with 61 describing allergic symptoms. Patients with beta-lactam allergy labels received fewer penicillins (P = 0.0002) and more aminoglycosides (P = 0.043) and metronidazole (P = 0.021) than patients without beta-lactam labels. Five patients received an antibiotic that was contraindicated according to their allergy status. Patients with AAL had significantly more hospital readmissions within 4 weeks (P = 0.001) and 6 months (P = 0.025) of discharge, compared with unlabelled patients. The majority (81%) of readmitted labelled patients had major infections. Conclusions: AAL are common, but poorly documented in hospital records. Patients with AAL are significantly more likely to require alternative antibiotics and hospital readmissions. There may be a role for antibiotic allergy delabelling to mitigate the clinical and economic burdens for patients with invalid allergy labels.