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Background: Ambient sulfur dioxide (SO2) has been associated with morbidity and mortality of respiratory diseases, however, its effect on length of hospital stays (LOS) and cost for these diagnoses remain unclear. Methods: We collected hospital admission information for respiratory diseases from all 11 cities in the Shanxi Province of China during 2017–2019. We assessed individual-level exposure by using an inverse distance weighting approach based on geocoded residential addresses. A generalized additive model was built to delineate city-specific effects of SO2 on hospitalization, hospital expenditure, and length of hospital stay for respiratory diseases. The overall effects were obtained by random-effects meta-analysis. We further estimated the respiratory burden attributable to SO2 by comparing different reference concentrations. Results: We observed significant effects of SO2 exposure on respiratory diseases. At the provincial level, each 10 μg/m3 increase in SO2 on lag03 was associated with a 0.63% (95% CI: 0.14–0.11) increase in hospital admission, an increase of 4.56 days (95% CI: 1.16–7.95) of hospital stay, and 3647.97 renminbi (RMB, Chinese money) (95% CI: 1091.05–6204.90) in hospital cost. We estimated about 6.13 (95% CI: 1.33–11.10) thousand hospital admissions, 65.77 million RMB (95% CI: 19.67–111.87) in hospital expenditure, and 82.13 (95% CI: 20.87–143.40) thousand days of hospital stay could have potentially been avoided had the daily SO2 concentrations been reduced to WHO’s reference concentration (40 µg/m3). Variable values in correspondence with this reference concentration could reduce the hospital cost and LOS of each case by 52.67 RMB (95% CI: 15.75–89.59) and 0.07 days (95% CI: 0.02–0.117). Conclusion: This study provides evidence that short-term ambient SO2 exposure is an important risk factor of respiratory diseases, indicating that continually tightening policies to reduce SO2 levels could effectively reduce respiratory disease burden in Shanxi Province.