Transjugular intrahepatic portosystemic shunt (TIPS), a new technique for the treatment of portal hypertension, has been successful in preliminary studies to treat acute variceal hemorrhage and to prevent variceal rebleeding. The purpose of this multicenter, randomized controlled trial is to compare the efficacy of TIPS with that of endoscopic sclerotherapy in the prevention of variceal rebleeding in cirrhosis. Eighty-one cirrhotic patients, with endoscopically proven variceal bleeding, were randomized to either TIPS (38 patients) or endoscopic sclerotherapy (43 patients). Randomization was stratified according to the following: if bleeding occurred < 1 week (stratum I); if bleeding occurred 1 to 6 weeks (stratum II); and if bleeding occurred 6 weeks to 6 months (stratum III) before enrollment. Follow-up included clinical, biochemical, Doppler Ultrasound, and endoscopic examinations every 6 months. During a mean follow-up of 17.7 months, 51% of the patients treated with sclerotherapy and 24% of those treated with TIPS rebled (P = .011). Mortality was 19% in sclerotherapy patients and 24% in TIPS patients (P = .50). Hepatic encephalopathy (HE) developed in 26% and 55%, respectively (P = .006). A separate analysis of the three strata showed that TIPS was significantly more effective than sclerotherapy (P = .026) in preventing rebleeding only in stratum I patients. TIPS is significantly better than sclerotherapy in preventing rebleeding only when it is performed shortly after a variceal bleed; however, TIPS does not improve survival and is associated with a significantly higher incidence of HE. The overall performance of TIPS does not seem to justify the adoption of this technique as a first-choice treatment to prevent rebleeding from esophageal varices in cirrhotic patients.