From December 10, 1982, to March 4, 1983, when influenza A (H3N2) viruses circulated in Michigan, outbreaks of influenza-like illness were identified in seven nursing homes in Genesee County; 272 (27%) of 1,018 residents were affected. Unvaccinated residents were more likely than vaccinated residents to become ill (risk ratio [RR], 2.6; 95% confidence interval [Cl], 1.8-3.6) and were subsequently more likely to be hospitalized (RR, 2.4; 95% Cl, 1.2-4.8), develop roentgenographically proven pneumonia (RR, 2.9; 95% Cl, 1.6-5.3), or die (RR, 5.6; 95% Cl, 1.2-9.1). Similar observations were made during investigations in six of the eight remaining nursing homes in Genesee County, in which 57 (12%) of 458 residents became ill sporadically. These findings suggest that influenza vaccine can reduce the incidence and severity of influenza virus infections among the elderly and chronically ill and underscore the importance of vaccination programs for those in nursing homes and in the general community.