One-third of medication errors that cause patient harm arise from medication administration errors (MAEs). Research regarding rates of MAEs is limited and has predominantly relied upon voluntary incident reports or observational studies. Traditionally, observational studies have used paper-based data collection. This is time intensive and creates distraction from actual observation, limits the amount of information recorded and requires transcription of data. Incorporating the use of handheld computers for data collection in MAE studies provides an opportunity to overcome some of these limitations. Our objective was to develop and test an observational method which incorporated the use of data collection software on a personal digital assistant (PDA, a handheld computer) for use in observational studies to monitor MAEs within hospitals.