BACKGROUND: Positive/close margins are associated with higher in-breast failure rates after breast-conserving surgery (BCS). We investigated whether intraoperative margin assessment aids in obtaining negative margins, and to evaluate the local control thus achieved. METHODS: Between 1994 and 1996, 264 patients underwent BCS for stages 0-III breast cancer [invasive, n = 200; ductal carcinoma in situ (DCIS), n = 64]. Intraoperative margin assessment included gross tissue inspection, specimen radiography, with or without frozen section. RESULTS: Ninety-two patients (46%) with invasive cancer and 24 (38%) with DCIS had positive/close margins on the permanent section analysis of their initial surgical specimens. Fifty-eight patients (29%) with invasive cancer and six (9%) with DCIS had initial positive/close margins, and were rendered margin-negative by intraoperative analysis and immediate re-excision. Final margins on permanent pathology were positive/close in 52 patients (20%): 34 patients (17%) with invasive cancer and 18 patients (28%) with DCIS. By multivariate analysis, excisional biopsy for diagnosis, larger tumor size, and multifocality were associated with final positive/close margins. Of these 52 patients, 23 underwent a second operation to achieve widely negative margins (13 completion mastectomies, 10 re-excisions). The 5-year ipsilateral breast recurrence-free survival rates after BCS and radiation were 99% for invasive cancer (n = 167) and 100% for DCIS (n = 27). CONCLUSIONS: Intraoperative assessment of margins assisted in identifying positive/close margins and allowed over a quarter of the patients to be rendered margin-negative with intraoperative re-excision at their original operation. This approach resulted in excellent local control in patients treated with BCS and radiation.