Giardia lamblia is a common gastrointestinal pathogen but is not generally appreciated as a cause of severe illness. To describe the epidemiology of severe giardiasis, we reviewed data on hospital discharges from the United States and the state of Michigan and compared results for giardiasis with those for shigellosis. From 1979 to 1988, an estimated 4,600 persons were hospitalized for giardiasis annually in the United States; the incidence of giardiasis was 2.0 hospitalizations per 100,000 persons, compared with 2.4 hospitalizations per 100,000 persons for shigellosis. Rates of giardiasis were highest among children younger than 5 years old and women of childbearing age; the median length of hospital stay was 4 days (annual total, 23,238 days). Among residents of Michigan from 1983 to 1987, the average annual incidence of hospitalization was 1.4 per 100,000 persons for giardiasis, compared with 1.0 per 100,000 persons for shigellosis. Volume depletion was the most frequently listed codiagnosis (33.2%); 18.7% of children younger than 5 years old who had severe giardiasis had failure to thrive. Physicians should consider the diagnosis of giardiasis for persons with severe gastrointestinal illness.