During a 13-month period, 25 residents of a nursing home were found to have positive cultures for methicillin-resistant Staphylococcus aureus (MRSA), including 17 with clinically significant infections. The outbreak came to attention in February 1985 when pneumonia was diagnosed in five residents during a 10-day period, and sputum cultures from all five were positive for MRSA. A survey revealed that nine (12%) of a sample of 74 residents and nine (7%) of 130 personnel had positive cultures for MRSA. Six of nine residents with MRSA detected in the culture survey had not been hospitalized for 6 or more months before the survey, suggesting acquisition of MRSA in the nursing home. Implementation of control measures was associated with a decreased occurrence but not complete elimination of new cases. MRSA in nursing homes is of concern because these institutions might serve as reservoirs for MRSA in the community. Further studies are required to define the magnitude of the problem, as well as optimal control measures.