BACKGROUND: No effective pharmacological or non-pharmacological interventions exist for patients with long COVID. We aimed to describe recovery 1 year after hospital discharge for COVID-19, identify factors associated with patient-perceived recovery, and identify potential therapeutic targets by describing the underlying inflammatory profiles of the previously described recovery clusters at 5 months after hospital discharge. METHODS: The Post-hospitalisation COVID-19 study (PHOSP-COVID) is a prospective, longitudinal cohort study recruiting adults (aged ≥18 years) discharged from hospital with COVID-19 across the UK. Recovery was assessed using patient-reported outcome measures, physical performance, and organ function at 5 months and 1 year after hospital discharge, and stratified by both patient-perceived recovery and recovery cluster. Hierarchical logistic regression modelling was performed for patient-perceived recovery at 1 year. Cluster analysis was done using the clustering large applications k-medoids approach using clinical outcomes at 5 months. Inflammatory protein profiling was analysed from plasma at the 5-month visit. This study is registered on the ISRCTN Registry, ISRCTN10980107, and recruitment is ongoing. FINDINGS: 2320 participants discharged from hospital between March 7, 2020, and April 18, 2021, were assessed at 5 months after discharge and 807 (32·7%) participants completed both the 5-month and 1-year visits. 279 (35·6%) of these 807 patients were women and 505 (64·4%) were men, with a mean age of 58·7 (SD 12·5) years, and 224 (27·8%) had received invasive mechanical ventilation (WHO class 7-9). The proportion of patients reporting full recovery was unchanged between 5 months (501 [25·5%] of 1965) and 1 year (232 [28·9%] of 804). Factors associated with being less likely to report full recovery at 1 year were female sex (odds ratio 0·68 [95% CI 0·46-0·99]), obesity (0·50 [0·34-0·74]) and invasive mechanical ventilation (0·42 [0·23-0·76]). Cluster analysis (n=1636) corroborated the previously reported four clusters: very severe, severe, moderate with cognitive impairment, and mild, relating to the severity of physical health, mental health, and cognitive impairment at 5 months. We found increased inflammatory mediators of tissue damage and repair in both the very severe and the moderate with cognitive impairment clusters compared with the mild cluster, including IL-6 concentration, which was increased in both comparisons (n=626 participants). We found a substantial deficit in median EQ-5D-5L utility index from before COVID-19 (retrospective assessment; 0·88 [IQR 0·74-1·00]), at 5 months (0·74 [0·64-0·88]) to 1 year (0·75 [0·62-0·88]), with minimal improvements across all outcome measures at 1 year after discharge in the whole cohort and within each of the four clusters. INTERPRETATION: The sequelae of a hospital admission with COVID-19 were substantial 1 year after discharge across a range of health domains, with the minority in our cohort feeling fully recovered. Patient-perceived health-related quality of life was reduced at 1 year compared with before hospital admission. Systematic inflammation and obesity are potential treatable traits that warrant further investigation in clinical trials. FUNDING: UK Research and Innovation and National Institute for Health Research.