This is a summary of the second effort to characterize medical research activities in Israel (1994-97). The study relies on responses to a questionnaire sent to all participants in the first survey (1991-94) and to additional, including younger, investigators. There were 1450 direct responses this time versus 1088 the first time. The distribution of investigators is 60% hospital-based versus 40% in basic sciences. The average number of funding sources per investigator has decreased from 2.6 to 2.2; however the percentage of funded investigators has increased from 60% to 70%. The greatest concentration of funded investigators remains at the Hebrew University and Hadassah Medical Center, followed by Tel Aviv University and associated hospitals. The Chief Scientist's Office of the Ministry of Health funds more than 40% of funded investigators (more than double the next highest funding source, the US-Israel Binational Fund), followed in decreasing order by the National Academy of Sciences, Ministry of Science, German-Israeli Foundation for Scientific Research and Development (GIF), Israel Cancer Society, and NIH. The percentage of funded hospital-based investigators has increased from 59% to 62%; however, funding remains higher for basic science investigators. There has been an increase in the percentage of Ph.D.'s working in a hospital environment and an interesting anomaly is that the nonacademic-affiliated Ph.D. investigators in hospitals have been successful in receiving funding, so now a greater percentage of nonacademic hospital staff are funded than academic staff (69% versus 61%).