IMPORTANCE: Recent evidence links air pollution to the severity COVID-19 symptoms and to death from the disease. To date, however, few studies have assessed whether air pollution affects the sequelae to more severe states or recovery from COVID-19 in a cohort with individual data. OBJECTIVE: To assess how air pollution affects the transition to more severe COVID-19 states or to recovery from COVID-19 infection in a cohort with detailed patient information. DESIGN AND OUTCOMES: We used a cohort design that followed patients admitted to hospital in the Kaiser Permanente Southern California (KPSC) Health System, which has 4.7 million members with characteristics similar to the general population. Enrollment began on 06/01/2020 and ran until 01/30/2021 for all patients admitted to hospital while ill with COVID-19. All possible states of sequelae were considered, including deterioration to intensive care, to death, discharge to recovery, or discharge to death. Transition risks were estimated with a multistate model. We assessed exposure using chemical transport model that predicted ambient concentrations of nitrogen dioxide, ozone, and fine particulate matter (PM2.5) at a 1 km scale. RESULTS: Each increase in PM2.5 concentration equivalent to the interquartile range was associated with increased risk of deterioration to intensive care (HR of 1.16; 95% CI: 1.12-1.20) and deterioration to death (HR of 1.11; 95% CI: 1.04-1.17). Results for ozone were consistent with PM2.5 effects, but ozone also affected the transition from recovery to death: HR of 1.24 (95% CI: 1.01-1.51). NO2 had weaker effects but displayed some elevated risks. CONCLUSIONS: PM2.5 and ozone were significantly associated with transitions to more severe states while in hospital and to death after discharge from hospital. Reducing air pollution could therefore lead to improved prognosis for COVID-19 patients and a sustainable means of reducing the health impacts of coronaviruses now and in the future.