To review the literature on the utility of fine-needle aspiration biopsy in the diagnostic management of nodular thyroid disease. Relevant articles published in major English-language medical journals during the last 10 years. Articles were reviewed to assess the results of fine-needle aspiration biopsy and its effect on thyroid management and cost of care. Fine-needle aspiration biopsy of the thyroid gland is safe, inexpensive, minimally invasive, and highly accurate in the diagnosis of nodular thyroid disease. Four cytologic diagnostic categories are used. Rates for these categories, based on data pooled from seven series, were as follows: benign, 69%; suspicious, 10%; malignant, 4%; and nondiagnostic, 17%. Analysis of recent data suggests a false-negative rate of 1% to 11%, a false-positive rate of 1% to 8%, a sensitivity of 65% to 98%, and a specificity of 72% to 100%. Limitations of fine-needle aspiration are related to the skill of the aspirator, the expertise of the cytologist, and the difficulty in distinguishing some benign cellular adenomas from their malignant counterparts. The introduction of fine-needle aspiration has had a substantial effect on the management of patients with thyroid nodules. The percentage of patients undergoing thyroidectomy has decreased by 25%, and the yield of carcinoma in patients who undergo surgery has increased from 15% to at least 30%. Fine-needle aspiration has decreased the cost of care by 25%. Fine-needle aspiration biopsy is safe, accurate, and cost-effective. The procedure has a central role in the management of thyroid nodules and should be used as the initial diagnostic test.