© 2021 The AuthorsBackground: Inflammation contributes to adverse health outcomes in community-dwelling populations. Little is known about inflammation in hospitalized older adults and its association with adverse outcomes. This study aimed to evaluate the association of the inflammatory markers C-reactive protein (CRP) and albumin measured during acute and geriatric rehabilitation hospitalization with institutionalization and mortality in geriatric rehabilitation inpatients. Methods: Within the REStORing health of acutely unwell adulTs (RESORT) cohort, CRP and albumin were measured as part of usual care during acute and geriatric rehabilitation hospitalization. Inflammatory markers are presented as median, peak (CRP: maximum; albumin: minimum), variation (interquartile range) and direction of change (increased CRP or decreased albumin: positive or negative difference between last measurement and median of preceding measurements). Logistic regression was used to determine the associations between inflammatory markers and institutionalization at three-month and all-cause mortality at three- and twelve-month post-discharge. Results: Geriatric rehabilitation inpatients (n = 1846) with a median age of 83.3 years (interquartile range 77.6–88.3) and 56.6% of female were included. Increased CRP during geriatric rehabilitation was associated with institutionalization. Higher median, peak and increased levels of CRP during geriatric rehabilitation but not during acute hospitalization were associated with higher mortality. Lower CRP variation during acute hospitalization but higher CRP variation during geriatric rehabilitation was associated with higher mortality. Lower median level of albumin during both hospitalizations were associated with higher mortality. Conclusions: Inflammation characterized by lower albumin during acute hospitalization and, higher CRP and lower albumin during geriatric rehabilitation was associated with mortality in geriatric rehabilitation inpatients. Increased CRP during geriatric rehabilitation was associated with institutionalization. Unresolved inflammation in geriatric rehabilitation might indicate ongoing disease activity leading to adverse outcomes.