To determine the factors causing thyroid dysfunction after surgery for Graves' disease, we studied 321 patients who underwent subtotal thyroidectomy during the 7-year period from 1981 to 1987. Thyroid functional status was evaluated biochemically and the patients were divided into four categories: recurrent hyperthyroidism, euthyroidism, latent hypothyroidism, and hypothyroidism. The following factors were analyzed: sex, age at onset of the disease, indication for surgery, serum titer of antimicrosomal hemagglutination antibody (MCHA), weight of resected thyroid tissue, size of remnant thyroid relative to body surface area, pathological findings of lymphoid follicles, and lymphocytic infiltration in the thyroid tissue. Probabilities of failure (recurrent hyperthyroidism and hypothyroidism) were estimated by the Kaplan-Meier method. Prognostic factors for failure were identified by using Cox's proportional hazards model. The incidence of hyperthyroidism and hypothyroidism 5 years after subtotal thyroidectomy was 16.2% and 9.6%, respectively. Significant factors for hyperthyroidism were relatively large thyroid remnant, high serum titer of MCHA (greater than or equal to 1:3200), and age at onset of the disease less than 20 years. The significant factor for hypothyroidism was severe lymphocytic infiltration. The level of postoperative thyroid stimulating hormone (TSH)-binding inhibition immunoglobulins (TBII) in patients with recurrence was significantly higher than in patients in remission. It is reasonable to determine the amount of remnant thyroid tissue in relation to patient body surface area. Although subtotal thyroidectomy can induce immunological remission by reduction of antigen, if the remission disappears, that is if TBII increases, recurrence of hyperthyroidism may develop even in patients without the unfavorable factors.