We studied health-related selection and consequences of an organizational downsizing among 886 municipal employees. Measurements of health indicators were conducted before any rumor of the downsizing and immediately after the downsizing 3 years later. Results of pre-downsizing health showed that those who did not find employment after the staff reductions were older employees with high preexisting morbidity. Those getting a new job elsewhere were younger and had better health already before the downsizing than the stayers. After the downsizing, deterioration of health was most likely in the stayers working in groups of major staff reductions and among the nonemployed leavers. In the reemployed leavers, the risk of increased health problems was lower than in others including employees working in no or minor downsizing groups.