Issues related to the definition and evaluation of telemedicine are articulated as a basis for conducting theoretically based, empirically sound, and policy-relevant evaluation. This paper includes a proposed operational definition of telemedicine, a discussion of the role of telemedicine in the healthcare system and economic analysis of telemedicine, an analysis of the basic approaches and requirements for telemedicine evaluation, and an identification of basic issues for evaluation. Telemedicine is conceived of as an integrated system of health-care delivery that employs telecommunications and computer technology as a substitute for face-to-face contact between provider and client. It has the potential for ameliorating seemingly intractable problems in healthcare such as limited access to care among segments in the population--especially the geographically disadvantaged--uneven quality of care, and cost inflation. Its true merit has yet to be determined by systematic empirical study. Such study should include a clear and precise identification of inputs and output and the nature of the relations between them, an assessment of the changes that might occur in the process of care as a consequence to telemedicine, and, ultimately, an evaluation of the effects of telemedicine on the healthcare system in terms of cost, quality, and accessibility. Several basic questions regarding the effects of telemedicine are posed as potential hypotheses for future research.