Background While persons with addiction are often hospitalized, hospitals typically employ abstinence-based policies specific to illicit drug use. Although illicit drug use is known to occur within hospitals, this problem has not been well characterized. Therefore, we sought to investigate the prevalence of and factors associated with having ever used drugs in hospital among people who use drugs (PWUD) in Vancouver, Canada. Methods Data were derived from prospective cohort studies of PWUD between December 2012 and May 2013. Multivariable logistic regression was used to identify demographic and behavioural factors associated with having ever used illicit drugs in hospital. Results Among 1028 participants who had experienced ≥ 1 hospitalization, 43.9% reported having ever used drugs while hospitalized. In multivariable analyses, factors positively associated with having ever used drugs in hospital included: daily cocaine injection and daily crack non-injection (both p < 0.05). Factors negatively associated with the outcome included: older age and male gender (both p < 0.05). The most common reasons for drug use in hospital were “wanting to use” and “being in withdrawal”. Drugs were most commonly used in patient washrooms. Conclusions Our findings demonstrate that an abstinence-based approach to drug use in hospitals may be ineffective at prohibiting drug consumption. High-risk drug use behaviours arising from ongoing drug use may pose risks for further harm and illness. Efforts to minimize the harms associated with using drugs in hospital are urgently needed.