The DSM-III is the first criteria-based, multiaxial classification system of mental disorders. Since its introduction in 1980, it has received more attention than any previous nosology in the history of psychiatry. The present report attempts to gauge the impact of DSM-III on diagnostic practice at one of the largest university-affiliated psychiatric hospitals in the United States. It compares the diagnoses given to 10,914 hospitalized patients during the last 5 years of the DSM-II era and the first 5 years of the DSM-III era. There were two major consequences of the change from DSM-II to DSM-III: (1) a marked reduction in the diagnosis of schizophrenia and a corresponding increase in the diagnosis of affective disorders, and (2) a marked increase in the diagnosis of personality disorders.