Teaching hospitals are recognized for treating rare diseases, but their value in caring for common illnesses is less clear. To assess quality of care for congestive heart failure and pneumonia, we reviewed the medical records of Medicare beneficiaries in major teaching, other teaching, and nonteaching hospitals in four states. Overall quality was rated better in major and other teaching hospitals than in nonteaching hospitals by physician reviewers and explicit process criteria, but the results varied for different subsets of explicit measures. Future studies should assess whether outcomes differ between teaching and nonteaching hospitals.