A study of urban pharmacies in Guatemala and in Chiapas, southern Mexico, was undertaken to analyse the scale of the inadequate drug advice provided, and to identify the contributing factors. The estimate of the scale of the problem was based on the results of 969 approaches to 191 pharmacies by 'magic clients' (i.e. researchers pretending to be looking for treatment for relatives who had one of three 'tracer' diseases), interviews with 4469 pharmacy users as they left the same 191 pharmacies, and a comparison of the quality of advice offered by public and private pharmacies in Guatemala (based on exit interviews with 150 users). The contributing factors were explored using a provider survey (interviews with 166 pharmacy supervisors and 371 drug vendors), an in-depth study analysing large-chain and independent Mexican pharmacies, and a review of the national drug policies in both countries. Although only about 11% of all drug treatments were recommended in pharmacies (the rest being prescribed by physicians or recommended by kin-groups), this still represents large numbers of treatments. Overall, 501 individuals who visited the 191 study pharmacies over 2 days of observation received drugs recommended by pharmacy staff. Much of the pharmacy advice was revealed to be poor: > 80% of the treatments recommended to the 'magic clients' for diarrhoeal disease or acute respiratory infection included unnecessary or dangerous drugs. Few of those who worked in the pharmacies based their advice on careful case histories. Drug advice in pharmacies was much more likely to be of poor quality than that from physicians or even kin-groups. The factors behind this poor advice were identified as a lack of knowledge about standard treatments and legal regulations, incompetence among pharmacy staff, commercial pressures (particularly in the large-chain pharmacies of Mexico), and a failure to implement the existing regulations covering the drug market and its retail practices. It is recommended that: (1) pharmacy owners and drug vendors be made more aware that the selling of drugs should involve provision of healthcare (as well as reasonable profit-making); (2) existing drug-related legislation be reinforced (through consensus-building rather than coercion); and (3) mass training of pharmacy supervisors and drug vendors, in the standard treatment of common diseases, be undertaken. This process will be challenging and slow.