Over a 19-month period, 165 patients with 183 infections caused by community-acquired, methicillin-resistant Staphylococcus aureus were seen at Henry Ford Hospital in Detroit, Michigan. The proportion of community-acquired staphylococcal infections resistant to methicillin rose from 3 % in March 1980 to 38% in September 1981. Drug abuse, serious underlying illness, previous antimicrobial therapy, and previous hospitalization were all associated with the development of this infection. Concurrent with the community epidemic was a nosocomial epidemic of methicillin-resistant S. aureus infection, which accounted for 30.6% of all nosocomial staphylococcal infections in January 1981. Control measures that included isolation, discharge precautions for carriers, and eradication of employee carriage were effective in preventing nosocomial transmission. The prevalence of methicillin-resistant S. aureus carriage among employees was 0.7%. Methicillin-resistant S. aureus may originate in the community as well as in the hospital, and presents a threat to patients in both settings.