From January 1979 to July 1980, methicillin and tobramycin resistantStaphylococcus aureuswas isolated from 45 patients at a Veteran's Administration hospital. Of these 45, 36 (80%) had clinical infections involving non-surgical wounds (16), urinary tract (10), blood (8), surgical wounds (7), and sputum (5). The epidemic strain had a single phage type (47/54/75/77/83A), a single, 16.4 Md plasmid, and produced an amino-glycoside inactivating enzyme (AAD[4‘]). Compared to a control group of patients with nosocomial antibiotic susceptibleS. aureusinfections, patients with the epidemic strain had more hospital days before a positive culture (p=.004), more severe underlying disease (p=.006), received antibiotics more often (p=.0018), and underwent physiotherapy more often (p = .00007). Although selected environmental and personnel cultures were negative for the epidemic strain, epidemiologic investigation suggested that hospital-wide dissemination ofS. aureusmay have occurred through patient contacts in the physiotherapy department with subsequent clusters of cases occurring on several wards.