Suicide rates have risen in the United States, and there has been a simultaneous, nearly ubiquitous decrease in services provided on psychiatric inpatient units (e.g., shorter stays, almost exclusive emphasis on crisis management). Despite limited research demonstrating its efficacy for reducing suicide risk, inpatient hospitalization remains the treatment of choice (and often legally mandated) for highly suicidal individuals. In this review, we discuss the sometimes‐confusing guidelines providers follow concerning psychiatric hospitalization for suicidal individuals. We then highlight the considerable evidence of heightened suicide risk and other negative outcomes during and immediately following hospitalization. Finally, we propose critical research directions to rigorously evaluate whether psychiatric hospitalization is iatrogenic, at least for some individuals. Such research has far‐reaching implications for practice and policy.