The objective of this study was to determine the accuracy of administrative data (by use of hospital discharge codes) for measuring comorbidity in patients with heart disease. One thousand seven hundred and sixty-five medical records of subjects admitted to hospital for AMI, unstable angina, angina pectoris, chronic IHD or heart failure were reviewed. The number and types of comorbidities were determined from the medical records (regarded as the "gold standard"). These were compared with the 10 discharge codes obtained from the hospital administrative records (referred to as the "administrative data"). The rate of false-negative and false-positive comorbidity diagnoses were determined. Twenty of the 21 comorbidities studied were underreported in the administrative data. For these 20 comorbidities, the median false-negative rate was 49.5% and ranged from 11% for diabetes to 100% for dementia. False-positive rates were low, less than 1.5%, except for chronic arrythmia (4.8%) and hypertension (4.2%). Mean percent agreement was high, ranging from 88% for hypertension to 100% for AIDS/HIV. Administrative data based on hospital discharge codes consistently underestimate the presence of comorbid conditions in our population. This has implications for administrators when estimating mortality, length of stay and disability. Researchers also need to be aware when using administrative data based on hospital discharge codes to assess subject's comorbidities that they may be widely underreported.