Positive surgical margins have been reported with disturbing frequency in radical prostatectomy specimens and may portend an increased risk of eventual treatment failure. We determined the location of any cancer, extracapsular extension and positive surgical margins in 144 consecutive step-sectioned radical prostatectomy specimens. Of the 46 stage A cancer patients 98% had residual cancer in the prostate after transurethral resection and in 76% cancer was found posteriorly in the gland. Extracapsular extension was identified in 10 patients (22%): anteriorly in 5, posterolaterally in 5 and on the most apical transverse section in 4. Positive margins were found in 10 patients (22%) and half of these occurred posterolaterally. Of the 98 stage B cancer patients tumor was located posteriorly in 97%. Extracapsular extension was found in 62 patients (63%) and in 87% of these it was located posterolaterally. Positive margins were found in 23%, most commonly in the posterolateral and rectal areas (57% and 26%, respectively), and in more than half of these the positive margin resulted from incision into the capsule. In 18 of the 144 patients (13%) a single positive surgical margin was the only pathological indicator of treatment failure and half of these occurred in the area of the neurovascular bundle. Some of these patients with extraprostatic tumor might have been cured if wide excision of the neurovascular bundle had been performed. Overemphasis on preservation of potency during radical prostatectomy may leave some patients with persistent local disease.