Objective To evaluate the diagnostic usefulness of effluent endotoxin by Limulus amoebocyte lysate (LAL) assay in gram-negative peritonitis patients on continuous ambulatory peritoneal dialysis (CAPD) therapy. Design Prospective study with patients serving as their own controls. Standard microbiologic work up and endotoxin analysis of effluents (night dwell) were done during the pre- and posttreatment phases. Setting Specimens from three teaching hospitals were processed and tested at a common center. Patients were left for treatment at their respective centers without intervention. Patients 32 clinical peritonitis and 40 infection-free CAPD patients were studied. Results 75% ( n = 24) of cultures were positive: 41.6% ( n = 10) gram-negative and 58.4% ( n = 14) gram-positive bacteria. Effluents of pre- and posttreated gram-negative cultures had endotoxin levels of 1.53 ± 0.169 and 0.214 ± 0.085 endotoxin units (EU)/mL, respectively ( p < 0.0001); pre- and posttreated gram-positive levels of 0.102 ± 0.06 and 0.122 ± 0.052 EU/mL, respectively ( p > 0.05); pre- and posttreated culture-negative peritonitis levels of 0.110 ± 0.025 and 0.087 ± 0.031 EU/mL, respectively ( p > 0.05); peritonitis-free effluents contained 0.117 ± 0.079 EU/mL. The diagnostic specificity and the sensitivity of LAL assay were 100% and 98.2% respectively. Conclusion Where initial microbiological work-up cannot demonstrate a pathogen, effluent endotoxin determined by quantitative LAL assay is a useful marker for diagnosis and management, within safe time limits, of gram-negative peritonitis in CAPD patients.