Short-burst oxygen therapy (SBOT) remains widely advocated for patients with chronic obstructive pulmonary disease (COPD), despite a lack of supporting evidence. The aim of this randomised, double-blind, placebo-controlled, parallel group study was to determine whether SBOT improves health-related quality of life (HRQL) or reduces acute healthcare utilisation in patients discharged following an acute exacerbation of COPD. Consecutive patients were screened; 78 of 331 were eligible for randomisation to cylinder oxygen, cylinder air or usual care following discharge. Patients were elderly with high acute healthcare utilisation, forced expiratory volume in one second of <1 L and had dyspnoea limiting daily activity but were not hypoxaemic at rest. Over the 6-month study period, there were no significant differences between patient groups in HRQL (Chronic Respiratory Questionnaire (CRQ), 36-item Short-Form Health Survey, Hospital Anxiety and Depression Scale) except for CRQ emotion domain. There were no significant differences in acute healthcare utilisation. Time to readmission was greatest in the usual care group. Cylinder use was high initially, but rapidly fell to very low levels within weeks in both cylinder oxygen and air groups. In conclusion, the availability of short-burst oxygen therapy for chronic obstructive pulmonary disease patients discharged from hospital following an acute exacerbation did not improve health-related quality of life or reduce acute healthcare utilisation. These results provide no support for the widespread use of short-burst oxygen therapy.