Observational hemodialysis (HD) studies report an association between hyponatremia and increased mortality. As volume overload is also associated with mortality, we wished to determine whether hyponatremia is linked to increased extracellular water (ECW). We measured ECW, total body water (TBW) and body composition predialysis with multifrequency bioimpedance, arm strength with pinch gauge and hand grip strength (PS, HGS), standard biochemistry profiles, comorbidity and clinical frailty scores (CFS). We reviewed 324 patients, 195 (60.2%) male, mean age 62.3 ± 15.6 years. Thirty-eight (11.7%) patients were hyponatremic (sodium ≤135 mmol/L), ECW/height2 was not different, but ECW/TBW (0.409 ± 0.016 vs. 0.402 ± 0.016, p < 0.01), C reactive protein (CRP) (9(4–6) vs. 5(2–12) g/L, p < 0.05), CFS (5(4–6) vs. 4(3–6), p < 0.05) were higher in hyponatremic patients, whereas appendicular lean mass index (8.6 ± 1.7 vs. 9.4 ± 1.8 kg/m2, p < 0.01), serum albumin (36.3 ± 5.5 vs. 38.8 ± 5.0 g/L, p < 0.01) and PS (3.7(2.7–4.7) vs. 4.7 (3.2–6.5) kg, p < 0.05)) were lower. Both serum sodium, and serum sodium after adjustment for glucose were associated with serum creatinine (β 4.26, (95% confidence limits [CL] 1.9–6.7), β 3.98 (CL 1.6–6.4), both p = 0.001, respectively) and negatively with CRP (β −0.76, [CL] -1.5 to −0.5), β −0.72 (CL −1.44 to −0.12), p = 0.036, p = 0.046, respectively) in a multivariable model. Hyponatremic HD patients did not simply have an increased ECW, as the increased ECW/TBW and ECW/ICW ratios were more likely secondary to loss of muscle mass and strength, associated with increased CRP and reduced albumin, suggesting that hyponatremia is associated with inflammation, loss of muscle mass and increasing frailty.