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Abstract Background In hospitals, the costs of employee turnover are substantial and intentions to leave among staff may manifest as lowered performance. We examined whether team climate, as indicated by clear and shared goals, participation, task orientation and support for innovation, predicts intention to leave the job and actual turnover among hospital employees. Methods Prospective study with baseline and follow-up surveys (2–4 years apart). The participants were 6,441 (785 men, 5,656 women) hospital employees under the age of 55 at the time of follow-up survey. Logistic regression with generalized estimating equations was used as an analysis method to include both individual and work unit level predictors in the models. Results Among stayers with no intention to leave at baseline, lower self-reported team climate predicted higher likelihood of having intentions to leave at follow-up (odds ratio per 1 standard deviation decrease in team climate was 1.6, 95% confidence interval 1.4–1.8). Lower co-worker assessed team climate at follow-up was also association with such intentions (odds ratio 1.8, 95% confidence interval 1.4–2.4). Among all participants, the likelihood of actually quitting the job was higher for those with poor self-reported team climate at baseline. This association disappeared after adjustment for intention to leave at baseline suggesting that such intentions may explain the greater turnover rate among employees with low team climate. Conclusion Improving team climate may reduce intentions to leave and turnover among hospital employees.