This study investigates the incidence, risk factors, and harms associated with inappropriate diagnosis of community-acquired pneumonia (CAP) among hospitalized adults. Conducted across 48 Michigan hospitals, the prospective cohort study included medical record reviews and patient telephone calls to assess patients treated for CAP between July 1, 2017, and March 31, 2020. Inappropriate diagnosis was defined using a National Quality Forum-endorsed metric, and risk factors were assessed. The primary outcome was the incidence of inappropriate diagnosis, with secondary outcomes including 30-day composite outcomes (mortality, readmission, emergency department visit, *Clostridioides difficile* infection, and antibiotic-associated adverse events) for those inappropriately diagnosed. Key findings include: - Among 17,290 hospitalized patients treated for CAP, 2079 (12.0%) met criteria for inappropriate diagnosis. - Patients inappropriately diagnosed were older, more likely to have dementia, or present with altered mental status. - Full antibiotic courses were associated with higher rates of antibiotic-associated adverse events. - The study highlights the common occurrence of inappropriate diagnosis of CAP, particularly among older adults and those with geriatric syndromes, and suggests that full-course antibiotic treatment may be harmful in these populations. The study underscores the need for improved diagnostic accuracy and antibiotic stewardship to reduce the harms associated with inappropriate CAP diagnosis and treatment.This study investigates the incidence, risk factors, and harms associated with inappropriate diagnosis of community-acquired pneumonia (CAP) among hospitalized adults. Conducted across 48 Michigan hospitals, the prospective cohort study included medical record reviews and patient telephone calls to assess patients treated for CAP between July 1, 2017, and March 31, 2020. Inappropriate diagnosis was defined using a National Quality Forum-endorsed metric, and risk factors were assessed. The primary outcome was the incidence of inappropriate diagnosis, with secondary outcomes including 30-day composite outcomes (mortality, readmission, emergency department visit, *Clostridioides difficile* infection, and antibiotic-associated adverse events) for those inappropriately diagnosed. Key findings include: - Among 17,290 hospitalized patients treated for CAP, 2079 (12.0%) met criteria for inappropriate diagnosis. - Patients inappropriately diagnosed were older, more likely to have dementia, or present with altered mental status. - Full antibiotic courses were associated with higher rates of antibiotic-associated adverse events. - The study highlights the common occurrence of inappropriate diagnosis of CAP, particularly among older adults and those with geriatric syndromes, and suggests that full-course antibiotic treatment may be harmful in these populations. The study underscores the need for improved diagnostic accuracy and antibiotic stewardship to reduce the harms associated with inappropriate CAP diagnosis and treatment.