An extensive outbreak of nosocomial infections caused by oxacillin- and aminoglycoside-resistant Staphylococcus aureus (OARSA) occurred over a 16 month period. A total of 349 isolates of OARSA were obtained from 174 patients. Colonization with OARSA was found in 92 patients. There was 120 infections in 82 patients; 50 were surgical wound infections, 13 were nonsurgical wound infections, six were pneumonias, 15 were urinary tract infections, 12 were intravenous site infections, and there were 19 episodes of bacteremia (seven transient, 12 persistent). In patients with persistent bacteremia, the mortality rate was 33 percent. In patients treated for persistent bacteremia with vancomycin, the survival rate was 80 percent. Infections were highly associated with the surgical intensive care unit, and 90 percent of the isolates of OARSA tested had the same phage-type. Elderly patients with significant underlying disease, a history of previous surgery or of prior antimicrobial therapy appeared to be at increased risk for OARSA infections. OARSA were resistant to multiple antibiotics besides oxacillin, but all isolates were sensitive to vancomycin and rifampin. Three surgical intensive care unit nurses were found to be nasal carriers of OARSA, and one nurse had dermatitis of both hands colonized with OARSA. Following the removal of these nurses from the surgical intensive care unit and the institution of strict infection control measures, the number of OARSA infections and colonizations decreased to less than one per month. OARSA produces serious nosocomial disease, and epidemiologic intervention was effective in controlling this outbreak.