Background and objective A proportion of patients with fibrotic hypersensitivity pneumonitis (fHP) follow a progressive disease course despite immunosuppressive treatment. Little is known about predictors of mortality in fHP. We aimed to investigate the impact of short-term lung function changes in fHP on mortality. Methods Baseline demographics for 145 consecutive patients with a multi-disciplinary team diagnosis of fHP, as well as baseline and 1-year follow-up of lung function, baseline echocardiographic findings, bronchoalveolar lavage (BAL) cellularity and all-cause mortality were recorded. Changes in forced vital capacity (FVC) ≥ 5% and ≥10%, and diffusion capacity of the lung for carbon monoxide (DLCO) ≥ 10% and ≥15% at 1 year were calculated. Cox proportional hazards analysis was performed to test for associations with mortality. Results Baseline lung function severity, age, presence of honeycombing on computed tomography (CT) and echocardiographic pulmonary arterial systolic pressure (PASP) ≥ 40 mm Hg were associated with early mortality, while BAL lymphocytosis was associated with improved survival. A decline in FVC ≥ 5% (hazard ratio [HR]: 3.10, 95% CI: 2.00–4.81, p < 0.001), FVC ≥ 10% (HR: 3.11, 95% CI: 1.94–4.99, p < 0.001), DLCO ≥ 10% (HR: 2.80, 95% CI: 1.78–4.42, p < 0.001) and DLCO ≥ 15% (HR: 2.92, 95% CI: 1.18–4.72, p < 0.001) at 1 year was associated with markedly reduced survival on univariable and multivariable analyses after correcting for demographic variables, disease severity, honeycombing on CT and treatment, as well as BAL lymphocytosis and PASP ≥ 40 mm Hg on echocardiography, in separate models. Conclusion Worsening in FVC and DLCO at 1 year, including a marginal decline in FVC ≥ 5% and DLCO ≥ 10%, is predictive of markedly reduced survival in fHP