Infection with varicella-zoster virus (VZV) occurred in 231 (16.6%) of 1,394 patients undergoing marrow transplantation in Seattle, Washington, between 1969 and 1982. The probability of VZV infection was 30% by one year after transplant. Eighty percent of infections occurred within the first nine months after transplant, and of these cases 45% had cutaneous or visceral dissemination. Twenty-three deaths were associated with VZV infection, all within the initial nine months after transplant. Postherpetic neuralgia, scarring, and bacterial superinfection were also significantly more frequent among patients with VZV in the first nine months after transplant (32%) than among patients with later infection (19%; P less than .05). By multivariate analysis, allogeneic transplant, acute or chronic graft-vs.-host disease, patient age between 10 and 29 years, diagnosis other than chronic myelogenous leukemia, and posttransplant use of antithymocyte globulin were each risk factors for VZV infection. Among infected patients, the only significant risk factor for VZV dissemination or death was acute graft-vs.-host disease (P less than .03 and P less than .0002, respectively.