The effects of HIV co-infection and multi-drug resistant tuberculosis (MDRTB) on tuberculosis prognosis are poorly defined. Therefore, we studied infectiousness and mortality of 287 tuberculosis patients treated with standard, directly observed, short-course therapy in the Peruvian community. During 6-17 months of treatment, 49 (18%) of patients died, of whom 48 (98%) had AIDS and 28 (57%) had MDRTB; 17/31 (55%) of MDRTB-patients with AIDS died within 2 months of diagnosis, before traditional susceptibility testing would have identified their MDRTB. Most non-MDRTB became smear- and culture-negative within 6 weeks of therapy, whereas most MDRTB remained sputum-culture-positive until death or treatment completion. HIV-negative patients with non-MDRTB had good outcomes. However, MDRTB was associated with prolonged infectiousness and HIV co-infection with early mortality, indicating a need for greater access to anti-retroviral therapy. Furthermore, early and rapid tuberculosis drug-susceptibility testing and infection control are required so that MDRTB can be appropriately treated early enough to reduce mortality and transmission. Copyright © 2006 by The American Society of Tropical Medicine and Hygiene.