This article assesses the operations of Porto Alegre, State of Rio Grande do Sul, (southern Brazil) needle exchange program (NEP), a setting where HIV infection rates have been on the rise among injection drug users (IDUs) in recent years, contrasting with substantial declines observed in this population, in major Brazilian cities (located in the southeast and southernmost part of Brazilian northeast). We explored local syringe dynamics, with the exclusive delivery in the local NEP of tagged syringes, and the subsequent monitoring of returned tagged/untagged used syringes from January to September 2002. We further assessed local NEP operations using focus groups and field observation, trying to expose the underlying reasons for the substantial delay in the return of tagged syringes and the continuous and relevant return of untagged syringes throughout the study period. We found that local IDUs reuse, divert, and create caches of syringes at their discretion. All efforts should be made to increase the availability of clean syringes and to fully integrate syringe exchange with comprehensive health education and health screening to effectively curb HIV spread.