On August 31, 1981, HHS issued its final rule revising the grant appeal procedures and included a new provision that sets guidelines for mediation of grant disputes. In the seven HHS mediation cases studied, four were successfully mediated. An analysis of these successful cases indicates that their resolution was primarily due to the issue being factual rather than legal. The three unsuccessful mediations suggest that if a disputed legal issue has not been resolved by the time adjudication begins, it is not likely to be resolved through mediation. The value of mediation to HHS and its possible value to other agencies is addressed, and various risks, including the erosion of regulatory rules, are considered. It is concluded that the HHS experience confirms that by formally establishing mediation as an adjunct to adjudicatory appeal procedures, a grantor agency can advance the fair and efficient disposition of grant disputes. Nineteen references and one table are disputes. Nineteen references and one table are included.