Methicillin-resistant Staphylococcus aureus is increasingly responsible for staphylococcal outbreaks in prison. There is limited information on the source of the outbreak strains, risk factors for infection, and transmission of these strains within a prison. We conducted a survey to determine the prevalence of nasal colonization with S. aureus in 2 New York State prisons. S. aureus isolates from clinical cultures collected from all New York State prisons during a 6-month period were compared with the colonizing strains. Analyses were conducted to determine whether prison-level characteristics were associated with colonization or infection with S. aureus. The colonization rate was 25.5% (124/487); 10.5% of the isolates were methicillin resistant, all were staphylococcal chromosomal cassette (SCC)mec type IV, and 61.5% were Panton Valentine leukocidin (PVL) positive. Surprisingly, 21.6% of the methicillin-susceptible isolates were also PVL positive. Of the clinical isolates, 48.3% were methicillin resistant, with 93.1% of the latter being SCCmec type IV and 48.3% being PVL positive. The predominant clone was USA 300. Prison-level risk factors for infection included the proportion of inmates with drug offenses, the length of inmate stay, and the jail from which inmates originated. This study suggests that both new and long-term inmates act as sources of S. aureus strains, with the more virulent of the latter preferentially being selected as pathogens.