There is an urgent need for new tools to improve our ability to diagnose tuberculosis (TB) and multidrug-resistant TB (MDR-TB) in resource-poor settings. In a retrospective analysis undertaken in a region with a high incidence of TB, we evaluated the performance of the microscopic observation drug susceptibility assay (MODS), a novel assay developed in Perú which uses an inverted light microscope and culture in Middlebrook 7H9 broth to detect mycobacterial growth. MODS detected 94.0% of 1,908 positive sputum cultures, whereas Lowenstein-Jensen (LJ) culture detected only 86.9% (P < 0.001). The median time to culture positivity was 8 days (compared to 16 days for the same 208 samples by LJ culture; P < 0.001, Wilcoxon signed rank test). The results obtained by direct susceptibility testing using MODS demonstrated excellent concordance for isoniazid and rifampin and the detection of multidrug resistance with those obtained by indirect colorimetric methods: the microplate Alamar Blue assay (MABA) and the tetrazolium microplate assay (TEMA) (agreement, 95, 98, and 94%; kappa values, 0.8, 0.7, and 0.7, respectively). The concordance of the susceptibility testing results for ethambutol and streptomycin was poor. MODS is a novel assay which can detect the organisms responsible for TB and MDR-TB directly from sputum inexpensively, rapidly, and effectively. A comprehensive prospective evaluation of MODS is under way in Perú, and independent validation in nonresearch laboratories should be undertaken at the earliest opportunity.