It is unclear whether the high burden of COPD in rural areas is related to worse outcomes in patients with COPD or is because the prevalence of COPD is higher in rural areas. We assessed the association of rural living with acute exacerbations of COPD (AECOPDs)-related hospitalization and mortality. We retrospectively analyzed Veterans Affairs (VA) and Medicare data of a nationwide cohort of veterans with COPD aged ≥ 65 years with COPD diagnosis between 2011 and 2014 that had follow-up data until 2017. Patients were categorized based on residential location into urban, rural, and isolated rural. We used generalized linear and Cox proportional hazards models to assess the association of residential location with AECOPD-related hospitalizations and long-term mortality. Of 152,065 patients, 80,162 (52.7%) experienced at least one AECOPD-related hospitalization. After adjusting for demographics and comorbidities, rural living was associated with fewer hospitalizations (relative risk-RR = 0.90; 95% CI: 0.89–0.91; P < 0.001) but isolated rural living was not associated with hospitalizations. Only after accounting for travel time to the closest VA medical center, neighborhood disadvantage, and air quality, isolated rural living was associated with more AECOPD-related hospitalizations (RR = 1.07; 95% CI: 1.05–1.09; P < 0.001). Mortality did not vary between rural and urban living patients. Our findings suggest that other aspects than hospital care may be responsible for the excess of hospitalizations in isolated rural patients like poor access to appropriate outpatient care.