In this prospective study of 70 patients with pleural effusion, the underlying disease could be identified in 62 cases. By predefined criteria, 31 of these effusions were classified as transudates and 31 as exudates. Pleural fluid protein content, LDH activity and cholesterol level were measured to investigate their utility in differentiating the exudates from the transudates. Protein and LDH levels, and their pleural fluid-to-serum ratios, resulted in erroneous classification of 11 to 15 percent of the effusions. Mean cholesterol level in malignant effusions was 94 mg/dl, 76 mg/dl in inflammatory effusions and 30 mg/dl in the transudates. Using a dividing line of 60 mg/dl to separate the exudates from the transudates, only 5 percent were incorrectly classified. Elevated cholesterol levels in exudates seem to be independent of the serum levels. Our findings indicate that the pleural fluid cholesterol level is a simple and cost-effective aid in differentiating exudative from transudative pleural effusions.