Supporters of the hospital held large photos of Oak Forest patients who would have been forced into nursing homes if the facility closed.
Oak Forest Hospital will remain open.
The Illinois Health Facilities and Services Board on Tuesday rejected Cook County's proposal to turn the facility into an urgent care center.
The county wanted to repurpose the facility as part of a money-saving plan to rebalance its health services, saing about $25 million a year.
But patients and residents in the area said the remaining health care facilities in southern Cook County was inadequate. Closing Oak Forest Hospital would be detrimental, they said.
The state board agreed, albeit by a single vote.
Supporters of the hospital at the meeting in Joliet, many of them holding large photos of Oak Forest patients who would have been forced into nursing homes if the hospital closed, rejoiced at the board's decision and called for Cook County Board President Toni Preckwinkle's ouster.
Preckwinkle said she was "very disappointed" and said the county had to go "back to the drawing board."
Lynda DeLaforgue, co-director of Citizen Action Illinois, said the board's vote gives the county a chance to reevaluate its strategic plan for health care and keep the hospital open.
The county pinned the failure of the proposal on the small board present at the meeting. The nine-member Illinois Health Facilities and Services board had quorum with the five members there, but there are three vacancies that need to be filled by Gov. Pat Quinn and a fourth member was absent.