To determine the incidence, cost, and outcome of severe sepsis in the United States. Observational cohort study. All nonfederal hospitals (n = 847) in seven U.S. states. All patients (n = 192,980) meeting criteria for severe sepsis based on the International Classification of Diseases, Ninth Revision, Clinical Modification. None. We linked all 1995 state hospital discharge records (n = 6,621,559) from seven large states with population and hospital data from the U.S. Census, the Centers for Disease Control, the Health Care Financing Administration, and the American Hospital Association. We defined severe sepsis as documented infection and acute organ dysfunction using criteria based on the International Classification of Diseases, Ninth Revision, Clinical Modification. We validated these criteria against prospective clinical and physiologic criteria in a subset of five hospitals. We generated national age- and gender-adjusted estimates of incidence, cost, and outcome. We identified 192,980 cases, yielding national estimates of 751,000 cases (3.0 cases per 1,000 population and 2.26 cases per 100 hospital discharges), of whom 383,000 (51.1%) received intensive care and an additional 130,000 (17.3%) were ventilated in an intermediate care unit or cared for in a coronary care unit. Incidence increased >100-fold with age (0.2/1,000 in children to 26.2/1,000 in those >85 yrs old). Mortality was 28.6%, or 215,000 deaths nationally, and also increased with age, from 10% in children to 38.4% in those >85 yrs old. Women had lower age-specific incidence and mortality, but the difference in mortality was explained by differences in underlying disease and the site of infection. The average costs per case were $22,100, with annual total costs of $16.7 billion nationally. Costs were higher in infants, nonsurvivors, intensive care unit patients, surgical patients, and patients with more organ failure. The incidence was projected to increase by 1.5% per annum. Severe sepsis is a common, expensive, and frequently fatal condition, with as many deaths annually as those from acute myocardial infarction. It is especially common in the elderly and is likely to increase substantially as the U.S. population ages.