The creation of a computerized database from Medicaid administrative claims data for research purposes is described. Researchers should consult with computer experts at their institution before selecting software for data manipulation and conversion. It is essential to have an accurate layout of the file record before attempting to convert raw claims data into data sets or other data formats. The location of data elements within the claim will vary depending on whether the record comes from a provider, an institution, or a pharmacy. Each claim contains a common header, a variable header, and a claim detail section. The difficulty in analyzing data elements within a claim detail lies in locating the starting point of the claim detail section. So that data elements not in character or numeric formats can be converted, the file record layout must describe the exact format of each data element and its COBOL notation. A data element dictionary is necessary for translating data element coding into usable data. Data elements not necessary for any planned analysis must be eliminated. The data are then "cleaned" to remove any denied or reversed claims and claims that contain incomplete or erroneous data. Regardless of the format data are obtained in, an accurate file record layout and a data element dictionary are essential to the conversion of administrative claims data into a computerized database for data analysis and research purposes.