In a six-month period in 1978 61 patients at a university hospital became colonized or infected with methicillin-resistant Staphylococcus aureus (MRSA). Ninety-three percent of patients with MRSA were on surgical services. Patients with burns acquired MRSA more frequently than did other acutely ill surgical patients (p less than .001), and often remained colonized for 30 days or more. The interval between admission and acquisition of S. aureus, number of antibiotics received, duration of antibiotic therapy before becoming colonized, and cost of hospitalization, were significantly greater in patients with MRSA infection than in matched controls with nosocomial methicillin-sensitive S. aureus infections. Acquisition of MRSA was epidemiologically associated with exposure to certain hospital personnel. Fourteen (6%) of 220 personnel exposed to MRSA patients harbored MRSA intranasally. Three of 14 colonized personnel carried MRSA intermittently for three or more months. Appropriate control measures failed to terminate the outbreak.