After a strong start to the 2011 season, Oswalt took a leave of absence from the Phillies on April 27, 2011, citing "personal reasons", namely to check on his family and home after a series of devastating tornadoes in Mississippi. He later spent several weeks on the disabled list due to a back injury. Overall, his season was considered to be disappointing, perhaps due to his back problems.
In the 2011 NLDS, Oswalt started Game 4 with the Phillies leading the St. Louis Cardinals 2 games to 1 and needing only one more win to advance. Oswalt allowed 5 runs in 6 innings and took the loss. The Phillies also lost Game 5 and were eliminated from the playoffs.
After the 2011 season for the Phillies, the team declined his option, thus making him a free agent.
Oswalt was regarded as one of the top starters on the free agent market and was courted by several teams. ESPN's Jayson Stark reported that Oswalt, only 34 years old and up to that point an elite pitcher, was holding out for the hope of a large salary from a team relatively close to his hometown of Weir, Mississippi. However, several of the teams on Oswalt's list were not interested, and Stark reported that Oswalt's performance in 2011 prevented other teams from offering the money he expected.