Between January 1, 1981, and December 31, 1990, 83 previously well children and 20 with stable underlying conditions were hospitalized because of complications of varicella. The mean hospital stay was 4.5 days and one child with pneumonia died. Skin or soft tissue infections and pneumonia were the most common complications. Central nervous system complications (15), dehydration (8) and Reye's syndrome (6) accounted for 75% of the nonsuppurative complications. Cellulitis (7), pneumonia (3) and encephalitis (3) were the most common diagnoses among the 20 children hospitalized greater than or equal to 7 days. No cases of Reye's syndrome were diagnosed after 1984. An increase in the number of soft tissue infections caused by Group A beta-hemolytic streptococci and involving an extremity was noted during the last 5 years. Chickenpox continues to cause significant morbidity in the pediatric population.