In the summer of 1991, four inmates from prison A in Upstate New York died of multi-drug-resistant tuberculosis. To determine the extent of resistant tuberculosis at prison A and transmission patterns, the authors interviewed staff and reviewed medical records and inmate movement histories. Contact investigation results were examined to determine tuberculin skin test conversions and to estimate risk of infection and disease for inmates who were seropositive for human immunodeficiency virus (HIV). Eight HIV-positive inmates and one HIV-negative guard, who was immunocompromised with cancer, had multi-drug-resistant tuberculosis. Eight died, a median of 28 days after the first culture-positive specimen was collected. All isolates had identical seven-drug resistance and DNA fingerprint patterns. Of exposed inmates, 92 out of 306 (30%) had skin test conversions. HIV infection was not associated with becoming infected with drug-resistant tuberculosis (active disease or skin test conversion), but once infected, HIV-positive inmates were significantly more likely to develop disease than were HIV-negative inmates (p < 0.001). The source case transferred to prison A in February 1991, was ill with undiagnosed multi-drug-resistant tuberculosis, refused medical care, and lived in the general prison population, where he transmitted the disease to other inmates. Lapses in infection control and laboratory delays contributed to this outbreak. Prisons should fully implement infection control guidelines to prevent tuberculosis transmission.