This paper reports on a study of the cross-national trends in health status during the economic transition and associated health sector reforms in Central and Eastern Europe (CEE). The central premise is that before long-run gains in health status are realized, the transition towards a market economy and adoption of democratic forms of government should lead to short-run deterioration as a result of: (i) reduction in real income and widening income disparities; (ii) stress and stress-related behaviour; (iii) lax regulation of environmental and occupational risks; and (iv) breakdown in basic health services. Analysis focused on three broad indicators of health status: life expectancy at birth, infant mortality rate and the probability of dying between the ages of 15 and 65 years, shown by the notation '50q15'. The study revealed significant new information about health status and the health sector which could not have been obtained without a proper cross-national study. Infant mortality rates in former socialist economies (FSE) follow the global trend, declining as per capita income rises. However, rates are lower than would be predicted given their income levels. Despite declining infant mortality, life expectancy at birth in the former socialist economies decreases as per capita income rises, in marked contrast to global trends. This is because rising income level is associated with greater probability of death between the ages of 15 and 65: the wealthier the society, the less healthy is its population, particularly for its males. Causes of death in the FSE follow global trends: higher death rates due to infectious and parasitic diseases in poorer countries, and higher death rates due to chronic diseases in wealthier countries. However, age-standardized death rates for chronic diseases generally associated with unhealthy lifestyles and environmental risk factors are very high when compared with wealthier established market economies (EME). Policies and procedures which alter the effectiveness of health services have had a demonstrable but mixed impact on health status during the early phase of transition. Effective preventive health strategies must be formulated and implemented to reverse the adverse trends observed in Central and Eastern Europe.