To examine variations in case-mix, structure, resource use, and outcome performance among teaching and nonteaching intensive care units (ICU). Prospective inception cohort study. A consecutive sample of 15,297 patients at 35 hospitals, which compared 8,269 patients admitted to 20 teaching ICUs at 18 hospitals vs. 7,028 patients admitted to 17 non-teaching ICUs at 17 hospitals. None. We selected demographic, physiologic, and treatment information for an average of 415 patients at each ICU, and collected data on hospital and ICU structure. Outcomes were compared using ratios of observed to risk-adjusted predicted hospital death rates, ICU length of stay, and resource use. When compared to nonteaching ICUs, teaching ICUs had twice the number of physicians who regularly provided services and cared for significantly younger and more severely ill (p < .001) patients. Risk-adjusted ICU length of stay was similar, but resource use was significantly (p < .001) greater in teaching ICUs, with $3,000 (10.5%) of estimated total costs for an average ICU admission related to increased use of diagnostic testing and invasive procedures in teaching ICUs. Risk-adjusted hospital death rates were not significantly different (p = .1) between all teaching and nonteaching ICUs, but were significantly (p < .05) better in four teaching ICUs, but in only one nonteaching ICU. The 14 hospitals that were members of the Council of Teaching Hospitals had significantly better risk-adjusted outcome in their 16 ICUs than all others (odds ratio = 1.21, confidence interval 1.06 to 1.38, p = .004). Teaching ICUs care for more complex patients in a substantially more complicated organizational setting. The best risk-adjusted survival rates occur at teaching ICUs, but production cost is higher in teaching units, secondary to increased testing and therapy. Teaching ICUs are also successfully transferring knowledge to trainees who, after their training, are achieving equivalent results at slightly lower cost in nonteaching ICUs.