Infection with strains of S. aureus resistant to gentamicin (SARG) was identified in 22 infants in the high-risk nursery of a municipal hospital during Oct. 1, 1976-Aug. 31, 1977; no infections with SARG were previously encountered. Infection with SARG occurred in 20 adults on the medical and surgical services and in 12 patients in the burn unit. Patients infected with SARG more frequently were treated with gentamicin and were hospitalized longer prior to infection than patients infected with strains of S. aureus susceptible to gentamicin. Sites of infection, hospital service involved and the death rates during hospitalization were similar for the 2 groups. Isolates of 2 different phage types had the same pattern of antibiotic resistance. Five representative isolates (2 phage types) were analyzed for plasmid content and their plasmids were analyzed by restriction endonuclease digestion. Two isolates contained identical plasmids and EcoRI restriction endonuclease fragments appeared common between plasmids of isolates from patients on different services at different times. Spread of resistance probably involved dissemination of a single plasmid among different isolates and spread of multiple plasmids containing the same type of resistance determinants.