To assess the occurrence and impact of adverse events in New Zealand public hospitals. Two-stage retrospective review of 6579 medical records, selected by systematic list sample from admissions for 1998 in 13 generalist hospitals providing acute care. After initial screening, medical records were reviewed by trained medical practitioners using a standardised protocol. Except for hospital stay, the sample appeared to be closely representative of New Zealand public hospital admissions for 1998 on key demographic and clinical criteria. The proportion of hospital admissions associated with an adverse event was 12.9% (incidence rate, 11.2%), of which nearly one fifth had occurred outside a public hospital (mainly doctor s rooms, patient s home, rest home, or private hospital). Most adverse events had minor patient impact, with less than 15% associated with permanent disability or death. Hospital workload was strongly affected, however, with adverse events adding an average of over nine days (median 4 days) to the expected hospital stay. There was limited evidence of patterning by diagnostic category. The elderly were disproportionately affected. The study provides representative base parameters that can contribute to the wider understanding, and potential improvement, of patient safety and the quality of care in New Zealand public hospitals.