An outbreak of erythromycin-resistant, exfoliative toxin-producing Staphylococcus aureus infection in a neonatal unit is described. The organism was coagulase positive but staphyloslide negative, and this unusual phenotype facilitated early recognition of the organism in the routine laboratory. In the initial outbreak there were 77 probable or confirmed cases, with a peak attack rate of 66%. Increased infection control measures were put in place and attempts were made to identify a staff carrier. No carriers were found and the major outbreak subsided. Sporadic cases occurred over the following 10 months, until May 1992, when a colonized staffperson was discovered. She was treated and no further cases occurred. The causative organism was subjected to typing by phage, enterobacterial repetitive intergenic consensus sequence polymerase chain reaction, and pulsed-field gel electrophoresis with two separate enzymes. The phage typing and genomic tests confirmed the presence of the same clone in the unit for 9 months. The organism possessed genes encoding exfoliative toxin A as determined by polymerase chain reaction.