Limited data are available on the contagiousness of vaccinated varicella cases. To describe secondary attack rates within households according to disease history and vaccination status of the primary case and household contacts and to estimate varicella vaccine effectiveness. Population-based, active varicella surveillance project in a community of approximately 320,000 in Los Angeles County, California, during 1997 and 2001. Varicella cases were reported by child care centers, private and public schools, and health care clinicians and were investigated to collect demographic, clinical, medical, and vaccination data. Information on household contacts' age, varicella history, and vaccination status was collected. Varicella secondary attack rate among household contacts; vaccine effectiveness using secondary attack rates in unvaccinated and vaccinated children and adolescents. A total of 6316 varicella cases were reported. Among children and adolescents aged 1 to 14 years, secondary attack rates varied according to age and by disease and vaccination status of the primary case and exposed household contacts. Among contacts aged 1 to 14 years exposed to unvaccinated cases, the secondary attack rate was 71.5% if they were unvaccinated and 15.1% if they were vaccinated (risk ratio [RR], 0.21; 95% confidence interval [CI], 0.15-0.30). Overall, vaccinated cases were half as contagious as unvaccinated cases. However, vaccinated cases with 50 lesions or more were similarly contagious as unvaccinated cases whereas those with fewer than 50 lesions were only one third as contagious (secondary attack rate, 23.4%; RR, 0.32 [95% CI, 0.19-0.53]). Vaccine effectiveness for prevention of all disease was 78.9% (95% CI, 69.7%-85.3%); moderate disease, 92% (50-500 lesions) and 100% (clinician visit); and severe disease, 100%. Under conditions of intense exposure, varicella vaccine was highly effective in preventing moderate and severe disease and about 80% effective in preventing all disease. Breakthrough varicella cases in household settings were half as contagious as unvaccinated persons with varicella, although contagiousness varied with numbers of lesions.