Background: Hospitalisation due to respiratory syncytial virus (RSV) infection in the first 2 years after birth has been associated with increased healthcare utilisation and associated costs up to 5 years of age in children born prematurely at less than 32 weeks of gestation who developed bronchopulmonary dysplasia (BPD). A study was undertaken to determine whether hospitalisation due to RSV infection in the first 2 years was associated with increased morbidity and lung function abnormalities in such children at school age, and if any effects were influenced by age. Methods: Healthcare utilisation and cost of care in years 5–7 were reviewed in 147 children and changes in healthcare utilisation between 0 and 8 years were assessed also using results from two previous studies. At age 8–10 years, 77 children had their lung function assessed and bronchial hyper-responsiveness determined. Results: Children hospitalised with RSV infection (n = 25) in the first 2 years had a greater cost of care related to outpatient attendance than those with a non-respiratory or no admission (n = 72) when aged 5–7 years (p = 0.008). At 8–10 years of age, children hospitalised with RSV infection (n = 14) had lower forced expiratory volume in 0.75 s (FEV0.75) (p = 0.015), FEV0.75/forced vital capacity (p = 0.027) and flows at 50% (p = 0.034) and 75% (p = 0.006) of vital capacity than children hospitalised for non-RSV causes (n = 63). Healthcare utilisation decreased with increasing age regardless of RSV hospitalisation status. Conclusions: In prematurely born children who had BPD, hospitalisation due to RSV infection in the first 2 years is associated with reduced airway calibre at school age.