Background: Health literacy has increasingly been viewed as a patient safety issue and may contribute to medication errors. Objective: To examine patients' abilities to understand and demonstrate instructions found on container labels of common prescription medications. Design: Cross-sectional study using in-person, structured interviews. Setting: 3 primary care clinics serving mostly indigent populations in Shreveport, Louisiana; Jackson, Michigan; and Chicago, Illinois. Patients: 395 English-speaking adults waiting to see their providers. Measurement: Correct understanding of instructions on 5 container labels; demonstration of 1 label's dosage instructions. Results: Correct understanding of the 5 labels ranged from 67.1% to 91.1%. Patients reading at or below the sixth-grade level (low literacy) were less able to understand all 5 label instructions. Although 70.7% of patients with low literacy correctly stated the instructions, “Take two tablets by mouth twice daily,” only 34.7% could demonstrate the number of pills to be taken daily. After potential confounding variables were controlled for, low (adjusted relative risk, 2.32 [95% CI, 1.26 to 4.28]) and marginal (adjusted relative risk, 1.94 [CI, 1.14 to 3.27]) literacy were significantly associated with misunderstanding. Taking a greater number of prescription medications was also statistically significantly associated with misunderstanding (adjusted relative risk, 2.98 [CI, 1.40 to 6.34] for ≥5 medications). Limitations: The study sample was at high risk for poor health literacy and outcomes. Most participants were women, and all spoke English. The authors did not examine the association between misunderstanding and medication error or evaluate patients' actual prescription drug-taking behaviors. Conclusions: Lower literacy and a greater number of prescription medications were independently associated with misunderstanding the instructions on prescription medication labels.