Since its inception in 1979, the Nicaraguan National Health System has dramatically improved health care in Nicaragua through the provision of universal coverage, emphasis on preventive community-based primary care, and community participation in health activities. Of major importance in the development of the health system has been the decentralization of the administration, planning, and implementation of health programs. The war in Nicaragua has had a major impact on the development of the health system. Nicaraguan health personnel and facilities have been the objects of attack by the contras and scarce resources have been diverted from the development of social programs to military activities. A large refugee population has been created which further strains existing resources. Community-based preventive health programs have been adversely affected, particularly in rural areas where military activity is the most intense. Because of the war, efforts to optimize regionalization of the health system have been retarded. Economic pressures both within Nicaragua resulting from the war and within the entire Latin American area have further hampered efforts for development. Continued major improvements in health care in Nicaragua will depend on a settlement of the present military conflict which is draining resources in all sectors of development, including health.