Early laboratory diagnosis is critical for the optimal management of human malaria, particularly following the introduction of relatively expensive, artemisinin-combination therapies (ACT). The performance of the laboratories and the quality of malaria diagnosis have recently been assessed in 36 healthcare facilities in six districts of Tanzania. Questionnaires, checklists and observations were used to collect information on the availability and functional status of equipment as well as on laboratory personnel and their performance in malaria diagnosis. Together, the surveyed facilities had 112 laboratory staff [almost half (41.1%) of whom were laboratory assistants] and 57 microscopes. Twenty-seven (75.0%) of the healthcare facilities included in the survey had only one functional microscope each. Only seven (12.3%) of the assessed microscopes had been serviced in the previous 2 years. Of the 38 microscopists who were assessed, 24 (63.2%) were re-using microscope slides, 29 (73.5%) were producing bloodsmears of low quality, and 30 (79.0%) were using Field's stain. Although the facility microscopists gave similar results to experienced research microscopists when reading bloodsmears prepared by the survey team, using high-quality reagents (kappa=0.769), they appeared far less competent when reading smears stained using the reagents from the study laboratories (kappa=0.265-0.489). The quality of malaria diagnosis at healthcare facilities in Tanzania, which is generally poor (largely because of inadequate supplies of consumables and the limited skills of laboratory staff in the preparation of bloodsmears), urgently needs to be improved if the utilization of ACT is to be sustainable.