To examine geographic variation in rates of infant hospitalization for diagnoses classified by type of hospitalization decision in Monroe County (Rochester), New York. Study design was cross-sectional and ecologic. International Classification of Diseases (ICD) codes were used to categorize all 7883 hospitalizations for infants (age, <24 months) beyond the newborn period between 1985 and 1991. Postal zip codes defined socioeconomic areas as inner-city, other urban, and suburban for the population at risk. In 1990, inner-city infants included 62% black and 65% Medicaid-covered infants, whereas suburban infants included 3% black and 6% covered by Medicaid. Hospitalization rates were compared among the three socioeconomic areas. Overall hospitalization rate was 50.3 per 1000 child years. Admissions classified as discretionary accounted for 59% of these, followed by those classified as mandatory, 18%; sometime (congenital heart disease, cleft palate), 15%; discretionary surgery (inguinal hernia, tonsillectomy/adenoidectomy), 6%; and unlikely to need admission, 2%. A stepwise, socioeconomic gradient in hospitalization was found, with rates of 38.1, 51.3, and 82.9 per 1000 child-years, respectively, for suburban, other urban, and inner-city areas. Rates for discretionary, unlikely, and mandatory admissions followed this gradient. Using the odds for hospitalization of suburban infants as the base odds, the odds ratio for discretionary hospitalization for inner-city infants was 2.88 (95% confidence interval [CI], 2.69 to 3. 08) and that for mandatory hospitalization was 2.20 (95% CI, 1.94 to 2.49). In multiple regression analysis, low education level of mothers explained 81% of the variance in discretionary hospitalization rate. Although the per capita rate of hospital care of inner-city infants was more than twofold greater than that for suburban infants, potential for reducing this difference is suggested by the fact that discretionary admissions accounted for 78. 9% of this difference, whereas mandatory admissions accounted for 17. 7% of the difference. The hospitalization rate for inner-city infants is much greater than that for suburban infants. A substantial portion of the difference, namely that attributable to mandatory admissions, reflected higher rates of serious illness. Differences attributable to discretionary admissions may reflect higher rates of serious illness to some extent, but also appear to reflect less effective health services to a substantial degree.