The fingernails of 512 consecutive hospital inpatients were examined and Terry's nails (by criteria modified slightly from those of Terry) were found in 25.2%. The nail abnormality was associated with the presence of cirrhosis, chronic congestive heart failure, and adult-onset diabetes mellitus, and was also associated with age. In younger patients the nail disorder was associated with an increased risk of systemic disease. Tissue biopsy showed that the nail abnormality was due to distal telangiectasias.