AIDS-related stigma and discrimination remain pervasive problems in health care institutions worldwide. This paper reports on stigma-related baseline findings from a study in New Delhi, India to evaluate the impact of a stigma-reduction intervention in three large hospitals. Data were collected via in-depth interviews with hospital staff and HIV-infected patients, surveys with hospital workers (884 doctors, nurses and ward staff) and observations of hospital practices. Interview findings highlighted drivers and manifestations of stigma that are important to address, and that are likely to have wider relevance for other developing country health care settings. These clustered around attitudes towards hospital practices, such as informing family members of a patient's HIV status without his/her consent, burning the linen of HIV-infected patients, charging HIV-infected patients for the cost of infection control supplies, and the use of gloves only with HIV-infected patients. These findings informed the development and evaluation of a culturally appropriate index to measure stigma in this setting. Baseline findings indicate that the stigma index is sufficiently reliable (alpha = 0.74). Higher scores on the stigma index--which focuses on attitudes towards HIV-infected persons--were associated with incorrect knowledge about HIV transmission and discriminatory practices. Stigma scores also varied by type of health care providers--physicians reported the least stigmatising attitudes as compared to nursing and ward staff in the hospitals. The study findings highlight issues particular to the health care sector in limited-resource settings. To be successful, stigma-reduction interventions, and the measures used to assess changes, need to take into account the sociocultural and economic context within which stigma occurs.