In 1992 we set up a peer review system to address all the steps involved in the production of a cytopathology report. The aim of the study was to generate accurate, timely and clinically relevant cytopathology reports. During a four year period we monitored and recorded activities such as turnaround time and adequacy of sampling as well as errors including typographical, SNOMED, coding, technical, labelling of slides, clerical, macroscopic and microscopic errors. The findings were discussed at weekly laboratory meetings attended by technical, scientific, clerical and medical staff. Minor errors not needing immediate action were discussed and incorporated as future improvements into the workings of the laboratory. For major discrepancies with potential implications for patient management, supplementary reports were issued and the relevant clinician was informed of the outcome. Detailed peer review of 1.3% of the total workload, during the period of the study, led to comments on some aspects of the original report in 24.9% of the reviewed cases. The majority of comments (57%) were minor, concerning issues related to the pre-analytical (clinical history, demographics, clerical and technical) aspects of the cases. The post analytical (microscopic description, diagnosis, recommendation and coding) phase of cases attracted 43% of the comments. In 1.1% of cases, the reviewer made suggestions regarding the diagnosis, and in 0.4% of cases a different recommendation was made. Cost-benefit analysis revealed that our internal quality assurance (IQA) activities added $1.20 to the total cost of each cytopathology case received and processed in the laboratory. On the benefit side, analysis of the data showed a continuous fall in the number of errors in both the pre-analytical and post-analytical phases of report generation. Furthermore, the turnaround time fell from 3.0 days at the beginning of the study to 1.7 days at present. These IQA activities have highlighted the importance of such a review system in detecting errors in cytopathology reporting. Recognition of the fact that cytopathology suffers from observer variability has led to the adoption of a uniform approach to cytological reporting among cytotechnologists and pathologists.