This study was conducted in nursing homes in a seven-county area of lower Michigan. Seventy percent of the 83 nursing homes in the study area provided data on vaccine use. Significantly higher rates of vaccination were found in smaller vs larger nursing homes; a requirement of written informed consent lowered the frequency of vaccination among residents. Among a subset of 45 homes that collected weekly prospective illness data during the confirmed epidemic of influenza A(H3N2), 17 (38%) experienced an influenza outbreak. In bivariate analyses, both greater size of nursing home and lower frequency of vaccination were significant predictors of outbreak status, suggesting a role for indirect protection or herd immunity.