The aim of this study was to evaluate the survival patterns and use and cost of hospital services of AIDS patients treated with azidothymidine (AZT) at St Mary's Hospital, London. A retrospective analysis of inpatient and outpatient case notes was performed, as was a survey of HIV-related care costs in 37 clinical departments. Of the 183 AIDS patients managed between 1 January 1987 and 30 September 1989, 132 were treated with AZt and 51 without AZT. Mean age at time of AIDS diagnosis for these predominantly homosexual men was 37.5 years for those treated with AZT compared with 40.7 years for those not on AZT. Median survival time from date of AIDS diagnosis was significantly longer for patients treated with AZT compared with those not treated with AZT (23 vs 13.5 months, P = 0.0004). The interval from diagnosis of HIV infection to date of AIDS diagnosis did not differ significantly between groups. Inpatients and outpatients use of services was greater for those receiving AZT than for those who did not. Costs reflected this increase use of services and the costs for those treated with AZT were pounds 3061 per AIDS patient-year higher compared with AIDS patients not receiving AZT; 36% of this cost was directly attributable to the cost of AZT itself. The introduction of AZT into routine clinical practice seems to have been a cost-effective intervention though it has been associated with an increased use of hospital services and associated costs per AIDS patient-year as well as increases survival time from AIDS diagnosis.