Background Residents of prisons have experienced disproportionate COVID-19-related health harms. To control outbreaks, many prisons in the USA restricted in-person activities, which are now resuming even as viral variants proliferate. This study aims to use mathematical modelling to assess the risks and harms of COVID-19 outbreaks in prisons under a range of policies, including resumption of activities.Methods We obtained daily resident-level data for all California state prisons from Jan 1, 2020, to May 15, 2021, describing prison layouts, housing status, sociodemographic and health characteristics, participation in activities, and COVID-19 testing, infection, and vaccination status. We developed a transmission-dynamic stochastic microsimulation parameterised by the California data and published literature. After an initial infection is introduced to a prison, the model evaluates the effect of various policy scenarios on infections and hospitalisations over 200 days. Scenarios vary by vaccine coverage, baseline immunity (0%, 25%, or 50%), resumption of activities, and use of non-pharmaceutical interventions (NPIs) that reduce transmission by 75%. We simulated five prison types that differ by residential layout and demographics, and estimated outcomes with and without repeated infection introductions over the 200 days.Findings If a viral variant is introduced into a prison that has resumed pre-2020 contact levels, has moderate vaccine coverage (ranging from 36% to 76% among residents, dependent on age, with 40% coverage for staff), and has no baseline immunity, 23-74% of residents are expected to be infected over 200 days. High vaccination coverage (90%) coupled with NPIs reduces cumulative infections to 2-54%. Even in prisons with low room occupancies (ie, no more than two occupants) and low levels of cumulative infections (ie, <10%), hospitalisation risks are substantial when these prisons house medically vulnerable populations. Risks of large outbreaks (>20% of residents infected) are substantially higher if infections are repeatedly introduced.Interpretation Balancing benefits of resuming activities against risks of outbreaks presents challenging trade-offs. After achieving high vaccine coverage, prisons with mostly one-to-two-person cells that have higher baseline immunity from previous outbreaks can resume in-person activities with low risk of a widespread new outbreak, provided they maintain widespread NPIs, continue testing, and take measures to protect the medically vulnerable.