OBJECTIVE To estimate the relative risk for peptic ulcer disease that is associated with the use of oral corticosteroids. METHODS A nested case-control study. METHODS Tennessee Medicaid program. METHODS The case patients (n = 1415) were hospitalized between 1984 and 1986 for gastric or duodenal ulcer or for upper gastrointestinal hemorrhage of unknown cause. The controls (n = 7063) were randomly selected from Medicaid enrollees not meeting the study criteria for inclusion as case patients. RESULTS The estimated relative risk for the development of peptic ulcer disease among current users of oral corticosteroids was 2.0 (95% CI, 1.3 to 3.0). However, the risk was increased only in those who concurrently received nonsteroidal anti-inflammatory drugs (NSAIDs); these persons had an estimated relative risk associated with current corticosteroid use of 4.4 (CI, 2.0 to 9.7). In contrast, the estimated relative risk for those corticosteroid users not receiving NSAIDs was 1.1 (CI, 0.5 to 2.1). Persons concurrently receiving corticosteroids and NSAIDs had a risk for peptic ulcer disease that was 15 times greater than that of nonusers of either drug. CONCLUSIONS Discrepant findings among earlier studies regarding steroids and the risk for peptic ulcer disease could in part be due to differences in the use of NSAIDs among study participants. The high risk for peptic ulcer disease associated with combined use of NSAIDs and corticosteroids indicates the need to prescribe this drug combination cautiously.