Purpose To evaluate the rational use of drug (RUD) patterns with a focus on prescribing and dispensing practices for providing information to the policy makers for further planning and identifying intervention strategies. Method A cross-sectional study conducted by interviewing 370 presenting outpatients, checking records of 900 outpatients with any cases and 798 outpatients with tracer diseases such as simple diarrhea, pneumonia and non-pneumonia (Flu) within 30 public health facilities (HFs) of five geographical areas with different socio-economic statuses grouped into high, middle and low. The WHO Operational Package for Monitoring and Assessing Country Pharmaceutical Situations indicators were used for data collection. Results Among the 3 items of drugs prescribed per average encounter, 97% were dispensed from HFs, of which 67% were adequately labeled, 84% were on the national essential drug (ED) list, and 78% were prescribed by generic name. Seventy-four percent of patients knew how to take the drugs they received, 47% of them received antibiotics (ABs), and 18% received injections. Forty-seven percent of under-five children with simple diarrhea received ABs, 77% received Oral Rehydration Salts (ORS) and 5% received anti-diarrhea drugs, and 91% of such under-five children with mid/moderate pneumonia received one of first line ABs, 15% received more than one ABs, and 41% of non-pneumonia (flu) patients of any age received ABs. Conclusion The use of drugs in Laos was not fully appropriate in terms of rationally prescribing and dispensing practices. Since prescriptions for AB, injections, non-ED, and non-generics are still high, information on drug use provided is insufficient. Therefore, continuous health education programs among both health staff and public are needed. Copyright (c) 2006 John Wiley & Sons, Ltd.