OBJECTIVES: To estimate the extent, nature and consequences of adverse events in a large National Health Service (NHS) hospital, and to evaluate the reliability of a two-stage casenote review method in identifying adverse events. DESIGN: A two-stage structured retrospective patient casenote review. SETTING: A large NHS hospital in England. POPULATION: A random sample of 1006 hospital admissions between January and May 2004: surgery (n = 311), general medicine (n = 251), elderly (n = 184), orthopaedics (n = 131), urology (n = 61) and three other specialties (n = 68). MAIN OUTCOME MEASURES: Proportion of admissions with adverse events, the proportion of preventable adverse events, and the types and consequences of adverse events. RESULTS: 8.7% (n = 87) of the 1006 admissions had at least one adverse event (95% CI 7.0% to 10.4%), of which 31% (n = 27) were preventable. 15% of adverse events led to impairment or disability which lasted more than 6 months and another 10% contributed to patient death. Adverse events led to a mean increased length of stay of 8 days (95% CI 6.5 to 9). The sensitivity of the screening criteria in identifying adverse events was 92% (95% CI 87% to 96%) and the specificity was 62% (95% CI 53% to 71%). Inter-rater reliability for determination of adverse events was good (kappa = 0.64), but for the assessment of preventability it was only moderate (kappa = 0.44). CONCLUSION: This study confirms that adverse events are common, serious and potentially preventable source of harm to patients in NHS hospitals. The accuracy and reliability of a structured two-stage casenote review in identifying adverse events in the UK was confirmed.