During a 4-month period in late 1988, we isolated ceftazidime-resistant strains of Klebsiella pneumoniae and other members of the family Enterobacteriaceae from 29 patients at a chronic-care facility in Massachusetts. Ceftazidime resistance resulted from two distinct extended-spectrum beta-lactamases of the TEM type which efficiently hydrolyzed the cephalosporin: YOU-1 with a pI of 5.57 and YOU-2 with a pI of 5.2. Genes encoding these enzymes were present on different but closely related high-molecular-weight, multiple antibiotic resistance plasmids of the H12 incompatibility group and were transferable by conjugation in vitro. Agarose gel electrophoresis of extracts from clinical isolates indicated that this outbreak arose from plasmid transmission among different strains of the family Enterobacteriaceae rather than from dissemination of a single resistant isolate. Isolation rates of ceftazidime-resistant organisms transiently decreased after use of this drug was restricted, but resistant isolates continued to be recovered 7 months after empiric use of ceftazidime ceased.