The Quality Indicator Study Group was created by the governing boards of three national professional organizations that have interest and experience in epidemiology, nosocomial infection control and prevention, and quality of care improvement. The Study Group has reviewed the existing literature concerning quality indicators (QIs), interviewed experts in the field, and focused on how best to evaluate such indicators, with an emphasis on nosocomial infection indicators as a paradigm for all QIs. In this report, we review pertinent issues and, where possible, provide specific advice on how to evaluate QIs and QI systems.