As a traditional Chinese medicine, Lianhua Qingwen capsules have been widely used to treat Coronavirus Disease 2019 (COVID-19). This study was aimed to demonstrate the association between treatment with Lianhua Qingwen capsules and the clinical outcomes of hospitalized patients with COVID-19. This retrospective study was conducted at four hospitals in Central China. Data of hospitalized COVID-19 patients were collected between December 19, 2019 and April 26, 2020. Based on whether Lianhua Qingwen capsules were used, patients were classified into Lianhua Qingwen and non-Lianhua Qingwen (control) groups. To control for confounding factors, we used conditional logistic regression in a propensity-score matched (PSM) cohort (1 : 1 balanced), as well as logistic regression without matching as sensitivity analysis. A total of 4918 patients were included, 2760 of whom received Lianhua Qingwen capsules and 2158 of whom did not. In the PSM model, after adjusting for confounders, the in-hospital mortality was similar between the Lianhua Qingwen group and the control group (6.8% vs. 3.3%, adjusted OR, 0.66 [95% CI, 0.38-1.15], = 0.138). The negative conversion rate of Severe Acute Respiratory Syndrome Coronavirus-2 (SARS-CoV-2) infection was higher in the Lianhua Qingwen group (88.3% vs. 96.1%, adjusted OR, 4.02 [95% CI, 2.58-6.25], < 0.001). The incidence of acute liver injury was comparable between the two groups (14.0% vs. 11.5%, adjusted OR: 0.85 [95% CI, 0.71-1.02], = 0.083), and the incidence of acute kidney injury was lower in the Lianhua Qingwen group (5.3% vs. 3.0%, adjusted OR: 0.71 [95% CI, 0.50-1.00], = 0.048). Treatment with Lianhua Qingwen capsules was not significantly associated with in-hospital mortality in COVID-19 patients. In the Lianhua Qingwen group, the negative conversion rate of SARS-CoV-2 infection was higher and the incidence of acute kidney injury was lower than in the control group.