Since 1998, a prospective payment system (PPS) for Medicare services provided by nursing homes in the US has been in operation. Concerns have been expressed that the PPS may affect the quality of care delivered to residents. This study evaluates the impact of the PPS on pharmacological secondary ischaemic stroke prevention in nursing homes. The nationally mandated Minimum Data Set and Online Survey Certification and Automated Record data system from 1997 and 2000 for four states were used. We conducted a quasi-experimental study comparing the pharmacological treatment rates for secondary stroke prevention in the pre-PPS period (1997) with those in the post-PPS period (2000) in residents who experienced an ischaemic stroke within 6 months (n1997 = 5008; n2000 = 5243) of living in nursing facilities (n1997 = 1226; n2000 = 1092) in Kansas, Maine, Mississippi or Ohio. The sample was stratified according to recommendations for use of warfarin. Logistic regression models adjusting for clustering effects of residents residing in homes using generalised estimating equations provided estimates of the PPS effect on use of antiplatelets and the use of warfarin. The unadjusted proportion of use of pharmacological agents for the secondary prevention of stroke was similar for warfarin in both time periods and increased for antiplatelets in 2000. Relative to the pre-PPS era, the likelihood of use of antiplatelets increased in the post-PPS era (adjusted odds ratio 1.26; 95% CI 1.15, 1.38); there was no effect on the use of warfarin. Although the lack of a PPS effect on pharmacological management of secondary ischaemic stroke is encouraging, there is still room for improvement in overall stroke management.