Introduction: Hospitals are a major source of care for underserved populations in the United States. However, little is known about how hospital-based health information technology (HIT) can improve the efficiency of care and reduce disparities. Objective: We examined the variation of preventable emergency department (ED) visits and associated racial disparities by hospital adoption of HIT patient engagement (HIT-PE) functionalities. Methods: This was an observational study of 6,543,514 non-Hispanic Black (Black) and non-Hispanic White (White) adult patients using 2019 datasets of seven states (Arizona, Florida, Kentucky, Maryland, North Carolina, Vermont, Wisconsin) from the State Emergency Department Databases, American Hospital Association Annual Survey & Information Technology Supplement, and Area Health Resources File. Results: High HIT-PE adoption was associated with lower rates of preventable ED (odds ratio [OR] = 0.992, p < 0.001). Specific HIT-PE functions such as importing medical records from other organizations into the patient portal (OR = 0.977, p < 0.001), electronically sending medical information to a third party (OR = 0.970, p < 0.001), and scheduling appointments online (OR = 0.987, p < 0.001) were also associated with reduced preventable ED rates. Black patients had higher rates of preventable ED compared with Whites (OR = 1.386, p < 0.001); however, the interaction of Black patients and high HIT-PE adoption was associated with lower rates of preventable ED (OR = 0.977, p < 0.001). Our results also showed that higher HIT-PE adoption was associated with a reduction in preventable ED visits among Black patients with comorbidities and Black patients living in low-income areas. Conclusions: The results of our study suggest that there is potential to reduce preventable ED rates and racial disparities through hospital-based HIT-PE functionalities.