Inexpensive, rapid, and reliable methods of detecting infection by and drug susceptibility of Mycobacterium tuberculosis (MTB) are crucial to the control of tuberculosis. The novel microscopic observation broth-drug susceptibility assay (MODS) detects early growth of MTB in liquid medium, allowing more timely diagnosis and drug susceptibility testing. Sputum samples from hospitalized patients in Peru were analyzed by using stains, culture, and PCR. Sensitivity of MODS (92%) compared favorably with the most sensitive of the other culture methods (93%). Sputum samples positive for tuberculosis were tested for susceptibility to isoniazid and rifampin with the microwell alamar blue assay (MABA) and MODS. In 89% of cases, there was concordance between MODS and MABA. Of the diagnostic and susceptibility testing methods used, MODS yielded results most rapidly (median, 9.0 and 9.5 days, respectively). MODS is a rapid, inexpensive, sensitive, and specific method for MTB detection and susceptibility testing; it is particularly appropriate for use in developing countries burdened by significant infection rates and increasing numbers of multiple-drug-resistant cases.