The frequency of Australia antigen is high in patients with Down's syndrome in large institutions (27.7%) and is low in patients without this syndrome in the same institutions (3.2%). It is rare in patients with Down's syndrome in small institutions (1.5%) and absent in newborn patients and those who are not institutionalized. Serum glutamic pyruvic transaminase levels were studied in age- and sex-matched groups of 16 patients with Down's syndrome and Australia antigen [phenotype Au (1)], 16 with Down's syndrome but without Australia antigen [Au(0)] and 16 Au(0) mental defectives without Down's syndrome. The findings indicated active liver cell breakdown in Au(1) patients, and were confirmed in an extensive study including 581 individuals. The findings are best explained by the operation of an environmental factor, probably infectious, present in the large institutions, and a host susceptibility factor present in association with Down's syndrome.