Intravascular (IV) catheter sepsis is a widely recognized complication of IV therapy or monitoring, but little emphasis has been placed on the morbidity and cost associated with this infection. To assess the consequences of IV catheter sepsis, we examined the medical records of 94 patients with 102 episodes of IV catheter sepsis due to percutaneously inserted catheters. Major complications occurred in 33 (32%) of the episodes and included septic shock (12 episodes), sustained sepsis (12), suppurative thrombophlebitis (7), metastatic infection (5), endocarditis (2), and arteritis (2). One patient died due to sepsis, and hospital stay was clearly prolonged in 15 episodes. The risk of major complications was highest in episodes of IV catheter sepsis caused by Candida, Pseudomonas aeruginosa, Staphylococcus aureus, or multiple pathogens, and the most severe complications were usually caused by S. aureus. The hospital cost of IV catheter sepsis was assessed by reviewing medical and billing records to identify extra medical care and then multiplying charges for that care by the appropriate cost-to-charge ratio. The average cost per episode, adjusted to 1991 dollars, was $3,707 for all episodes and $6,064 for episodes caused by S. aureus. The morbidity and cost associated with IV catheter sepsis warrant substantial efforts to minimize the incidence of this complication and especially to prevent cases due to S. aureus.