A new topical antibiotic, mupirocin, has been found to be as effective as erythromycin for the treatment of impetigo, but concerns about its expense have been raised. This controlled clinical trial sought to compare the cost-effectiveness of erythromycin (E) and mupirocin (M). Ninety-three children, aged 3 months to 16 years, were randomly assigned to receive 10 days of oral erythromycin (n = 46) or topical mupirocin (n = 47). Costs and effects were measured through structured interviews. Cost per case differed significantly by group (E = $56.85; M = $62.30; P less than .05) due chiefly to extra visits and medication changes needed by those treated with mupirocin. Erythromycin and mupirocin were equally effective. The likelihood of side effects (E = 43%, M = 22%) approached significance (P less than .07); those treated with erythromycin were willing to pay more for a different medicine to avoid the side effects experienced (P less than .05). Working parents and school-age children were more likely to alter their daily activities when the patient was taking erythromycin (P less than .04). Compliance and parental satisfaction did not differ by treatment group; however, parents of children treated with erythromycin were more likely to prefer the alternate drug regimen. It is concluded that the type of medication prescribed can be based on parental preference because the increased cost of mupirocin is offset by increased side effects and number of schooldays and workdays lost with erythromycin.