Setting: The region of Leon/Chinandega in Western Nicaragua. Objective: To assess the relapse rate after short course chemotherapy with thioacetazone in the continuation phase in patients with sputum smear-positive pulmonary tuberculosis. Design: A cohort of 247 new sputum smear-positive patients with pulmonary tuberculosis, started on the national short-course treatment (2SRHZ/6TH) between October 1986 and April 1988 as part of the National Tuberculosis Programme, were followed up for 17–32 months after completion of treatment. Two thirds of the patients spent the first 2 months hospitalized, the rest received the whole treatment as out-patients. Results: 204 (83%) completed treatment, seven failure cases were cured with retreatment, 24 defaulted, 10 were transferred out and two died. The patients who completed treatment continued to undergo smear examination for acid-fast bacilli every three months. Of the 204 patients who completed treatment, five died and 10 were lost to follow-up. The remaining 189 patients were followed up for a total of 388 person-years. Three relapses appeared (1.6%), one relapse during 129 person years of observation. Two of the relapse cases were hospitalized, and the third received the full treatment as an out-patient. In the 223 patients who first entered the study, contact tracing detected 24 new smear-positive and 43 smear-negative cases. Adverse reactions (jaundice) required suspension of treatment in one patient, but only temporarily. Conclusion: Short course chemotherapy with an ambulatory continuation phase with isoniazid and thioacetazone seems to have a low relapse rate under routine conditions and should continue to be used.