Background: Hospitalisation is a stressful experience that frequently triggers anxiety in children. While anxiety influences wellbeing, few studies provide clinically meaningful thresholds to guide practice. The absence of validated cut-off scores makes it difficult to identify clinically significant anxiety requiring intervention. Objective: To examine the relationship between trait anxiety and quality of life (QoL) among hospitalised children aged 8–18 years, identify associated socio-demographic and clinical factors, and determine a clinically meaningful trait anxiety cut-off predicting poor QoL. Methods: A cross-sectional study was conducted in the paediatric wards of University Malaya Medical Centre from 25 October to 5 December 2023. One hundred children were recruited within 24 hours of admission. Anxiety was assessed using the State- Trait Anxiety Inventory for Children (STAIC), and QoL using the Paediatric Quality of Life Inventory (PedsQL). Demographic and clinical data were obtained from caregivers and medical records. Results: Median age was 10 years (IQR 9–12); 64% were male. Median STAIC trait score was 32 (IQR 27–36), and median PedsQL score was 74.5 (IQR 60–82). Trait anxiety showed a moderate negative correlation with QoL (ρ = −0.502, p < 0.001). Repeated admissions and daily medication use were associated with higher trait anxiety and poorer QoL. ROC analysis identified a trait anxiety cut-off score of 33.5 (Youden’s Index 0.494) predicting poor QoL. Conclusion: Higher trait anxiety is significantly associated with poorer QoL in hospitalised children. A STAIC trait score ≥33.5 may serve as a practical screening threshold for early psychosocial intervention.