Penicillin--"tolerant" Staphylococcus aureus strains are resistant to the lethal action of penicillins, but are inhibited by normal (low) concentrations. They are deficient in autolytic enzyme activity which appears to be necessary for bacteriolysis and the lethal action of penicillins. This "deficiency" is caused by a large excess of an inhibitor of autolysin. Seven such tolerant strains have been isolated from blood, bone, or sputum of patients who responded poorly to penicillin treatment of endocarditis, osteomyelitis, or staphylococcal pneumonia. These isolates were of different phage-types, and most showed cross-tolerance to the killing action of cephalosporins or vancomycin, antibiotics to which they were sensitive (inhibited). They were killed at normal rates by gentamicin, cycloserine, and rifampicin. Population analysis indicated that the proportion of tolerant organisms within a resistant strain is 7% or less; their ability to inhibit autolytic activity within their own and neighbouring cells appears to account for the net decreased autolytic activity of the entire strain; 44% of the bacteraemic strains studied showed penicillin tolerance. Tolerance is thus a common, clinically important form of penicillin resistance, that differs from previously described forms of pencillin resistance, that due to beta-lactamase, and that due to "intrinsic" (e.g., methicillin resistance) mechanisms.