In a prospective study of patients treated with cephalexin or co-trimoxazole, almost all isolated E. coli strains of intermediate susceptibility to ampicillin or cephalosporin (MIC 2-16 microgram/ml) were shown to produce beta-lactamase detectable with a chromogenic cephalosporin substrate, or by the clover-leaf test or the acidimetric method. When assayed in preparations of sonicated bacteria, the enzyme had a cephalosporinase-substrate profile in a large majority of cases. In order to evaluate the clinical significance of this beta-lactamase production, 48 patients with urinary tract infection (UTI) were treated with cephalexin, an antibiotic hydrolysed by the enzyme. Forty-three additional patients were treated with co-trimoxazole for comparison. A statistically significant difference in cure rate (p less than 0.05) was found after 2 weeks. Six recurrences occurred in the cephalexin group and none in the co-trimoxazole group. However, after six weeks there were 8 and 5 recurrences, respectively (p less than 0.05). There were no differences in beta-lactamase activity or MIC/MBC between initial strains and isolates from recurrent UTI. Thus, the recurrent infections were not due to emergence of resistance.