A prescription audit was carried out among the outpatient attendees of 31 secondary level hospitals under Maharashtra Health Systems Development Project. Use of drugs and cost of treatment of diarrhoea were studied using the prescriptions for diarrhoea collected for the prescription audit. Average number of drugs prescribed per prescription for treatment of diarrhoea was 3.7. It was higher than average number of drugs per prescription in the Maharashtra Health Systems Development Project hospitals in general. About three fourths of the prescriptions contained oral rehydration salts. Furazolidone and metronidazole were prescribed in about half of the prescriptions. Cotrimoxazole was prescribed in about one fourth of prescriptions. About 60% of the prescriptions contained other drugs. The average cost of prescription for diarrhoea was Rs. 14 and increased with the number of drugs prescribed. Average cost of prescription was the highest for those written by general practitioners. Pathological tests were indicated only in case of 11%.