Objectives To determine the incidence of hospital admissions for adverse events related to drug therapy, and to assess whether these drug‐related admissions (DRAs) could have been reasonably prevented. Setting A tertiary teaching hospital. Design and patients Prospective assessment of all admissions through the emergency department and resulting in a stay of more than 24 hours during 30 consecutive days in November and December 1994 to determine if the admission was related to drug therapy. Cases of intentional overdose were excluded. Main outcome measures The number, type, causality and avoidability of drug‐related admissions. Results Of 965 admissions, 55 (5.7%) were assessed as being drug‐related. Drug‐related admissions (DRAs) were designated possibly (38%), probably (46%) or definitely (16%) drug‐related; caused by prescribing factors (26%), patient noncompliance (27%) and adverse drug reactions (47%); and classified as definitely (5.5%), possibly (60.0%) and not (34.5%) avoidable. The estimated annual cost to the hospital for all DRAs was $3496956 and for unavoidable DRAs was $1629494. Conclusion The DRA rate we found lies around the middle of the range of other published rates. Few DRAs were judged definitely avoidable and over one‐third were unavoidable. Nevertheless, the largest proportion were judged possibly avoidable. As the drugs identified in this study are clearly needed in the community, efforts to reduce DRAs must concentrate on education, counselling and monitoring of drug therapy.