Recent large-scale cohort studies that reported an important reduction in mortality and chronic obstructive pulmonary disease (COPD) morbidity with inhaled corticosteroids may be biased. We used a population-based cohort of Saskatchewan residents 55 years of age or over, first hospitalized for COPD during 1990 to 1997, to study this potential bias. These 979 subjects were followed for a year from discharge until their first readmission for COPD or death (389 subjects). Inhaled corticosteroid exposure was measured as any dispensing within 90 days after discharge. Cox's proportional hazards model was used to compare the time-fixed analysis employed in the recent studies with the alternative time-dependent analysis. The time-fixed adjusted rate ratio was 0.69 (95% CI: 0.55-0.86) for inhaled corticosteroid use within 90 days, whereas the time-dependent rate ratio was 1.00 (95% CI: 0.79-1.26). With the time-fixed analysis, the rate ratios were affected by the length of the exposure period, decreasing from 0.98 for a 15-day exposure period to 0.51 for 365 days, but remained stable between 1.06 and 0.94 with the time-dependent analysis. Inhaled corticosteroid use after hospitalization for COPD was not found to reduce mortality and morbidity. Although observational studies can be valuable, the recent reports of reductions in mortality and morbidity with inhaled corticosteroids are biased by their inappropriate allocation of exposure and analysis of immortal time.