A nosocomial outbreak of infection and colonization involving six patients and caused by a strain of Staphylococcus aureus showing intermediate resistance to methicillin (MIC = 4-8 mg l-1) is described. The outbreak was associated with skin-carriage of the epidemic strain by a nurse suffering from severe eczema. The reduced susceptibility of the outbreak strain to methicillin was associated with beta-lactamase production. Elimination or inhibition of beta-lactamase activity produced a two-fold decrease in methicillin MIC. There was no evidence for the presence of either penicillin-binding protein 2a or the corresponding mec gene, which mediate resistance in fully methicillin-resistant strains.