A nosocomial outbreak of scabies in a specialist inpatient HIV unit resulted from a patient admitted with crusted scabies. Treatment of his infestation with topical scabicides alone failed and he remained infectious for several weeks. His infestation was then eradicated with combined topical treatment and oral ivermectin. In total, 14 (88%) out of 19 ward staff became symptomatic, and 4 (21%) had evidence of scabies on potassium hydroxide examination of skin scrapings. The ward infection control policy was changed to distinguish patients with crusted scabies from those with ordinary scabies. A second patient with crusted scabies was treated with combined oral and topical therapy early in his admission and nursed with more stringent isolation procedures. No nosocomial transmission occurred and his infestation responded rapidly to treatment. Patients with crusted scabies require strict barrier nursing if nosocomial transmission is to be avoided. Ivermectin combined with topical scabicides may be a more efficacious treatment than topical scabicides alone in such patients.