OBJECTIVES--To compare the cost effectiveness and safety of inpatient cataract surgery (with one night in hospital postoperatively) with ambulatory day case surgery under local anaesthesia. DESIGN--Prospective study of patients receiving inpatient (group 1) or day case (group 2) surgery. SETTING--One ophthalmic surgical firm. PATIENTS--100 patients in each group, excluding those with coexisting ocular conditions, contraindications to local or request for general anaesthesia, ill health, or lack of agreed minimum social care; four patients died during follow up. INTERVENTIONS--Envelope method and implantation of the posterior chamber lens into the capsular sac in both groups. MAIN MEASURES--Perioperative complications, operating and turnover times, visual outcome at three to six days and 10 weeks to six months after operation, patient satisfaction (according to self administered questionnaire) at three to six days, and total costs (1989 salaries) for both groups. RESULTS--Patients in both groups did not differ significantly in age or sex, perioperative complications, visual outcome (6/9 or better in 78 patients in group 1 and 75 in group 2 at one month after operation and 6/12 or better in 92/98 in group 1, 90/98 in group 2 at final follow up), or patient satisfaction. The mean total cost per patient for group 1 patients was 365.99 pounds and for group 2, 221.62 pounds. CONCLUSIONS--Day case surgery for cataract is safe and more cost effective. IMPLICATIONS--Day case surgery should be recommended to increase availability of cataract surgery and thereby improve quality of life for more patients.