OBJECTIVE: To compare neonatal intensive care unit (NICU) or special care nursery admission for deliveries with water immersion compared with deliveries in the matched control group without water immersion. Secondary outcomes included adverse neonatal diagnoses, maternal infections, and perineal lacerations. METHODS: We conducted a retrospective study using electronic health record data (2014-2018) from two health systems (eight hospitals), with similar clinical eligibility, associated with low risks of intrapartum complications, and implementation policies for waterbirth. The water immersion group included women intending waterbirth. Water immersion was recorded prospectively during delivery. The comparison population were women who met the clinical eligibility criteria for waterbirth but did not experience water immersion during labor. Comparison cases were matched (1:1) using propensity scores. Outcomes were compared using Fischer's exact tests and logistic regression with stratification by stage of water immersion. RESULTS: Of the 583 women with water immersion, 34.1% (199) experienced first-stage water immersion only, 65.9% (384) experienced second-stage immersion, of whom 12.0% (70) exited during second stage, and 53.9% (314) completed delivery in the water. Neonatal intensive care unit or special care nursery admissions were lower for second-stage water immersion deliveries than deliveries in the control group (odds ratio [OR] 0.3, 95% CI 0.2-0.7). Lacerations were lower in the second-stage immersion group (OR 0.5, 95% CI 0.4-0.7). Neonatal intensive care unit or special care nursery admissions and lacerations were not different between the first-stage immersion group and their matched comparisons. Cord avulsions occurred for 0.8% of second-stage water immersion deliveries compared with none in the control groups. Five-minute Apgar score (less than 7), maternal infections, and other adverse outcomes were not significantly different between either the first- or second-stage water immersion groups and their control group. CONCLUSION: Hospital-based deliveries with second-stage water immersion had lower risk of NICU or special care nursery admission and perineal lacerations than matched deliveries in the control group without water immersion.