An increased incidence in nafcillin (semisynthetic penicillins) resistant Staphylococcus aureus (SR-SA), which peaked in January 1980, was noted in Columbus Children's Hospital (CCH), Columbus, Ohio. To investigate the source of this outbreak, we reviewed the susceptibility patterns of S. aureus strains isolated at CCH for a 12-month period (July 1979 to June 1980). A total of 773 isolates from 706 patients were investigated with a total of 40 patients colonized or infected with SR-SA, approximately 25% of which were diagnosed in the ambulatory clinics. These patients did not have any apparent previous contact with the inpatient unit or inpatient personnel. Eight nosocomial infections were also uncovered. The first appeared in December 1979. Our studies suggested that some SR-SA isolates may have originated in the community and these organisms may not be exclusive to the hospital environment, as was felt to be the case previously. We also determined that the baseline incidence for our hospital of SR-SA was approximately 2% of total S. aureus isolates. Only 35% of the SR-SA demonstrated resistance to multiple antibiotics. This report indicates that community and nosocomial 5. aureus isolates should be monitored for nafcillin resistance. Vancomycin susceptibility should be tested on all isolates and reported for SR-SA in life-threatening infections.