This paper reports the results of a multicentric, randomized controlled trial to evaluate the efficacy of Kshaarasootra (Ayurvedic medicated thread) in the management of fistula-in-ano, in comparison with conventional surgery. This trial was carried out at Bombay, Chandigarh, New Delhi and Wardha. Complete healing was noted in all 265 patients in the Kshaarasootra series and all 237 patients in the surgery series. The median healing time was, however, significantly longer in the Kshaarasootra series (8 wk) than in the surgery series (4 wk). In both the series, the healing time was least for subcutaneous fistula and highest in the case of high anal fistula. Patients in both the series are being followed up for one year after the completion of treatment, and the recurrence rates, based on 150 patients in each series are 4 per cent in the Kshaarasootra series and 11 per cent in the surgery series, a significant difference (P = 0.03). Transient local burning and increased discharge from the fistulous opening were observed in most patients treated with Kshaarasootra. Mild anal incontinence was observed in 8 patients treated with Kshaarasootra and 13 patients treated with surgery. It is concluded that the long-term outcome with Kshaarasootra is better than with surgery, although the initial healing time is longer. Kshaarasootra thus offers an effective, ambulatory and safe alternative treatment for patients with fistula-in-ano. It also constitutes a new drug delivery technique for conditions like anal fistula.