Positive surgical margins (PSMs) after radical prostatectomy (RP) indicate failure of surgery to completely clear cancer. PSMs confer an increased risk of biochemical recurrence (BCR), but how more robust outcomes are affected is unclear. This study investigated factors associated with PSMs following RP and determined their impact on clinical outcomes (BCR, second treatment radiotherapy and/or androgen deprivation therapy, and prostate cancer-specific mortality PCSM). The study cohort included men diagnosed with prostate cancer (pT2-3b/N0/M0) between January 1998 and December 2016 who underwent RP from the South Australian Prostate Cancer Clinical Outcomes Collaborative database. Factors associated with risk of PSMs were identified using Poisson regression. The impact of PSMs on clinical outcomes (BCR, second treatment, and PCSM) was assessed using competing risk regression. Of the 2827 eligible participants, 28% had PSMs—10% apical, 6% bladder neck, 17% posterolateral, and 5% at multiple locations. Median follow-up was 9.6 years with 81 deaths from prostate cancer recorded. Likelihood of PSM increased with higher pathological grade and pathological T-stage, and greater tumour volume, but decreased with increasing surgeon volume (odds ratio OR: 0.93; 95% confidence interval CI: 0.88–0.98, per 100 previous prostatectomies). PSMs were associated with increased risk of BCR (adjusted sub-distribution hazard ratio sHR 2.5; 95% CI 2.1–3.1) and second treatment (sHR 2.9; 95% CI 2.4–3.5). Risk of BCR was increased similarly for each PSM location, but was higher for multiple margin sites. We found no association between PSMs and PCSM. Our findings support previous research suggesting that PSMs are not independently associated with PCSM despite strong association with BCR. Reducing PSM rates remains an important objective, given the higher likelihood of secondary treatment with associated comorbidities.