The advent of domestic bioterrorism has emphasized the need for enhanced detection of clusters of acute illness. We describe a monitoring system operational in eastern Massachusetts, based on diagnoses obtained from electronic records of ambulatory-care encounters. Within 24 hours, ambulatory and telephone encounters recording patients with diagnoses of interest are identified and merged into major syndrome groups. Counts of new episodes of illness, rates calculated from health insurance records, and estimates of the probability of observing at least this number of new episodes are reported for syndrome surveillance. Census tracts with unusually large counts are identified by comparing observed with expected syndrome frequencies. During 1996-1999, weekly counts of new cases of lower respiratory syndrome were highly correlated with weekly hospital admissions. This system complements emergency room- and hospital-based surveillance by adding the capacity to rapidly identify clusters of illness, including potential bioterrorism events.