Effectiveness of influenza vaccination in reducing pneumonia and influenza hospitalizations and deaths among elderly members of a prepaid health plan was analyzed retrospectively. Two epidemics caused by the H3N2 subtype of type A influenza were studied. Vaccine derived from the H2N2 subtype of influenza A virus failed to protect against the Hong Kong (H3N2) virus during the 1968-1969 epidemic. Vaccine derived from the A/Hong Kong/68 (H3N2) virus yielded an estimated 72% (31-100%) reduction in hospitalization and 87% (52-100%) reduction in mortality during the 1972-1973 epidemic caused by A/England/72 (H3N2). These findings are consistent with those reported in vaccinated young persons, and hence it appears they may be broadly generalized.