The aims of the study were to compare the burden of varicella and herpes zoster in Australia. No national surveillance exists for varicella or herpes zoster. We used hospital morbidity data from 1993-9 and pharmaceutical prescribing data from 1995-9. In the financial year 1998/99, there were 4718 hospitalizations for zoster compared to 1991 for varicella. For varicella the mean age of patients was 15 years compared to 69 years for zoster. The mean length of stay in hospital was 4.2 days for varicella and 12.7 days for zoster. Varicella accounted for 8396 (3726 with principal diagnosis varicella) bed days compared to 26 266 (5382 with principal diagnosis of zoster) for zoster. The in-hospital case-fatality rate was 0.4% for varicella and 1% for zoster. In 1999, 59 200 community-based cases of zoster were treated with antivirals. We estimate that 157 266 cases of zoster occurred in the community in 1999, a rate of 830 per 100 000 population. Herpes zoster has a higher burden of disease than varicella, and must be a component of disease surveillance in order to determine the full impact of vaccination on the epidemiology of varicella zoster virus (VZV).