Over 22-1/2 months an epidemic of at least 127 cases of nosocomial infection developed from a strain of Proteus rettgeri resistant to all antibiotics commonly tested in hospital laboratories. Although there were at least four cases of septicemia and one related death, the majority of cases consisted of asymptomatic bacteriuria or clinically mild urinary tract infection. Indwelling urinary tract devices and antibiotic therapy were important predisposing factors. Data supported an association between increasing use of gentamicin and increasing rates of resistant infection. No common source was found, and contact spread appeared more likely. Control measures included efforts to reduce unnecessary exposure to the incriminated risk factors and to improve asepsis in the management of catheterized patients. An additional 36 cases and one related death were identified in the 7-1/2 months following the investigation and institution of control measures. Nosocomial infection with extremely resistant organisms may pose a serious hazard wherever indwelling urinary tract devices and antibiotics are used together intensively.