The reported prevalence of nasal carriage of methicillin-resistant Staphylococcus aureus (MRSA) by hospital personnel averages 2.5%. From August 1985 to September 1987, 155 patients at our Veterans' Affairs Medical Center (VAMC) were colonized or infected with MRSA. In December 1986, only two (2.1%) of 94 healthcare workers were identified as nasal carriers. Prompted by a sharp increase in the number of patients with MRSA in early 1987, contact tracing identified 450 employees, of whom 36 (8%) were nasal carriers. Thirty-five percent of surgical residents (7 of 20) were nasal carriers. Prior to being identified as a nasal carrier, one surgical resident was associated with the inter-hospital spread of the VAMC MRSA strain to the burn unit of the affiliated university hospital. Three family members of two employee carriers were also found to harbor the epidemic strain. All 36 carriers were decolonized with various antimicrobial combinations. Vigorous infection control measures were effective in controlling the epidemic. The frequency of MRSA carriage by hospital personnel at our medical center during the epidemic proved higher than previously appreciated. Thus, healthcare workers may comprise a sizable MRSA reservoir. During an MRSA epidemic, infection control should attempt to identify and decolonize this hospital reservoir, as these individuals can disseminate MRSA both within the hospital as well as into the community.