ABSTRACT Background This study assessed the prevalence and incidence of potentially inappropriate medication use for older patients undergoing surgery and its association with polypharmacy. Methods A retrospective, population‐based cohort study with patients ≥ 65 undergoing first surgery at Landspitali—The National University Hospital of Iceland from 2005 to 2018. Participants were categorized by number of medications filled before and following their surgical episode into: non‐polypharmacy (< 5), polypharmacy (5–9), and hyper‐polypharmacy (≥ 10). The prevalence and incidence of PIM use were compared between polypharmacy categories based on the 2019 Beers criteria. Results A total of 17,198 admissions associated with surgery were assessed (53.8% female) with a median [IQR] age of 75 [70, 81]. The prevalence of potentially inappropriate medication among patients with non‐polypharmacy (< 5) was 36.6% (95% CI: 35.1–38.2), with polypharmacy (5–9) 80.2% (95% CI: 79.2–81.2), and with hyper‐polypharmacy 95.8% (95% CI: 95.3–96.2). New potentially inappropriate medication use post‐surgery occurred in 38.5% (95% CI: 37.0–40.1). Risk factors included female sex, increased comorbidity, and prior use of a multidose dispensing service. Compared with patients without potentially inappropriate medication use, patients with potentially inappropriate medication use had a higher rate of postoperative diagnosis of medication‐related harm (12.6% vs. 11.3%), increased 30‐day mortality (5.2% vs. 0.3%), longer hospital stay (3 [1, 8] vs. 2 [1, 5] days), and increased 30‐day readmission rate (11.3% vs. 6.5%). Conclusions Potentially inappropriate medication use is strongly associated with polypharmacy/hyper‐polypharmacy and adverse outcomes in older surgical patients. Surgical hospitalization offers a critical window for medication review, deprescribing, and follow‐up planning to reduce medication‐related harm.