OBJECTIVE This work aimed to evaluate the impact of automated dispensing cabinets on the dispensing error rate, the number of interruptions, and pillbox preparation times. METHODS A prospective observational study was conducted across 16 wards in two departments (internal medicine and surgery) of a large teaching hospital. The study compared eight wards using automated dispensing cabinets (ADCs) and eight using a traditional ward stock (TWS) method. A disguised observation technique was used to compare occurrences of dispensing errors and interruptions and pillbox preparation times. The proportion of errors was calculated by dividing the number of doses with one or more errors by the total number of opportunities for error. Wards participating in the 'More time for patients' project-a Lean Management approach-were compared with those not participating. The potential severity of intercepted errors was assessed. RESULTS Our observations recorded 2924 opportunities for error in the preparation of 570 pillboxes by 132 nurses. We measured a significantly lower overall error rate (1.0% vs 5.0%, p=0.0001), significantly fewer interruptions per hour (3.2 vs 5.7, p=0.008), and a significantly faster mean preparation time per drug (32 s vs 40 s, p=0.0017) among ADC wards than among TWS wards, respectively. We observed a significantly lower overall error rate (1.4% vs 4.4%, p=0.0268) and a non-significantly lower number of interruptions per hour (3.8 vs 5.1, p=0.0802) among wards participating in the 'More time for patients' project. CONCLUSIONS A high dispensing-error rate was observed among wards using TWS methods. Wards using ADCs connected to computerised physician order entry and installed in a dedicated room had fewer dispensing errors and interruptions and their nurses prepared pillboxes faster. Wards participating in a Lean Management project had lower error rates than wards not using this approach.