BACKGROUND The use of Medicaid data to study cancer-related outcomes would be highly desirable. However, the accuracy of Medicaid claims data in the identification of incident cases of breast cancer is unknown. OBJECTIVE (1) To estimate the sensitivity of Medicaid claims data for case ascertainment of breast cancer, and (2) to determine the positive predictive value (PPV) of diagnostic and procedure codes retrieved from Medicaid claims, using the Ohio Cancer Incidence Surveillance System (OCISS) as the gold standard. METHODS The study used the linked OCISS and Medicaid enrollment files, 1997-1998 (n = 1,648). The claims search yielded 2,635 incident cases, of which 1,132 were also identified through the OCISS-Medicaid files. Sensitivity and PPV of Medicaid data were calculated in subgroups of the population. RESULTS The overall sensitivity was 68.7 percent, but varied greatly across the subgroups of the population. It was lower among women enrolled in Medicaid only for part of the study year than those enrolled in Medicaid for 12 months of the study year (56.7 percent and 78.0 percent respectively, p < 0.0001), and lower among those who are dual Medicare-Medicaid eligible compared to those not participating in the Medicare program (63.1 percent and 78.6 percent respectively, p < 0.0001). The overall PPV was 43.0 percent, increasing up to 86.6 percent in the presence of procedure codes indicating the presence of mastectomy and lumpectomy, in addition to that of breast cancer diagnosis. CONCLUSIONS The sensitivity of Medicaid claims for case ascertainment of breast cancer is somewhat low, but improves considerably when accounting for women enrolled in Medicaid for the entire duration of the study year. The PPV is poor due to a high rate of false positives. The higher PPV obtained in the presence of procedure codes, in addition to diagnosis codes, will help researchers to correctly identify incident cases of breast cancer using Medicaid claims data.