The shift of patients from inpatient to outpatient settings as a result of various well-known economic, technologic, and demographic forces presents a challenge for internal medicine residency training programs. In response, we developed a new ambulatory site for education of medical students and residents. The Ambulatory Diagnostic and Treatment Center functions as a medical day hospital serving the needs of patients requiring intensive diagnostic or therapeutic interventions on a short-term basis. The center maintains many of the educational advantages of an inpatient service including block rotations of house officers, easy access to consultants and specialized services, and daily attending rounds while providing experience in outpatient management skills. This unit represents a new concept in ambulatory education and, if adaptable to other institutions, may be a valuable component of a broad ambulatory medicine curriculum.