Tissue deficiency of vitamin B12 and folate results in an increase in serum homocysteine (sHcy). We have measured sHcy in patients with reduced serum vitamin B12 and/or red cell folate (RCF) to determine its usefulness as a discriminant for the diagnostic interpretation of reduced vitamin levels. Of 3846 patients who had serum vitamin B12 and RCF assayed, 335 (9%) had reduced vitamin levels. Multivariate analysis showed a significant association between sHcy and serum creatinine (p = 0.0001), positive intrinsic factor (IF) antibody or neutrophil hypersegmentation (NHS) (p = 0.001), increased MCV (p = 0.014) and low RCF (p = 0.025) but no relationship with the level of serum vitamin B12 or haemoglobin. After censoring the patients with renal impairment (n = 54), the distribution of the remaining 72 patients with elevated sHcy was 37/151 (25%) with low serum vitamin B12 with or without low RCF and 35/130 (27%) with low RCF alone. sHcy correctly identified response to vitamin therapy in 33/35 (94%) patients who had adequate parameters to assess response. The positive predictive values of IF antibody/NHS, macrocytosis and/or low RCF for elevated sHcy were 100% and 34% respectively. Twenty-four percent of patients with a low serum vitamin B12 and elevated sHcy had no abnormal haematologic parameters as determined by the routine laboratory staff. These data suggest that the usefulness of measuring sHcy in a routine diagnostic setting is limited and a careful review of the peripheral blood for macrocytosis and NHS plus determination of RCF may be a more cost-effective process than sHcy assay in most instances to determine the presence of tissue deficiency.