We report the first instance in Australia of treatment failure due to a strain of methicillin-resistant Staphylococcus aureus (MRSA) with reduced susceptibility to vancomycin--heteroresistant vancomycin-intermediate S. aureus (hVISA). The infection occurred in a 41-year-old man with multiple risk factors. No transmission of the organism to other patients or the environment was detected. This case may herald the beginning of a new phase of staphylococcal resistance in Australia.