This report presents results of a study of the diffusion of an expensive new medical diagnostic technology, magnetic resonance (MR) imaging. The study was conducted during the early 1980s, when diffusion was just beginning to occur. There were many uncertainties about the ultimate clinical benefits of MR, the technical configuration of the equipment that would prove to be most advantageous (i.e., the characteristics of the magnet), the regulatory environment in which MR would operate, third-party reimbursement for MR use, and the effects of an increasingly competitive health care market on the financial soundness of investment in this expensive new equipment. Some of these uncertainties persist, but MR has nonetheless diffused rapidly into the medical care system. Although the ultimate utility of MR cannot yet be assessed, there is cause for concern about the process by which diffusion occurred. This study illuminates issues in the efficient diffusion of new medical technologies and suggests changes that might improve the process.