Nosocomial infections caused by extended-spectrum β-lactamase (ESBL)—producing gram-negative bacteria complicate therapy and limit treatment options. However, the clinical significance of infections caused by ESBL-producing bacteria remains unclear. A critical examination of the literature provides divergent views of the effect of ESBL carriage on morbidity and mortality and suggests that ESBL production may have its most marked effect on ceftazidime. Effective strategies for the empirical and directed treatment of infections caused by ESBL-producing pathogens include the use of carbapenems and, possibly, the fourth-generation cephalosporin cefepime. Studies indicate that the use of cefepime to treat serious nosocomial infections (e.g., bacteremia, pneumonia, and urinary tract infections) is associated with high rates of microbiological and clinical success. The probability of attaining time above the minimum inhibitory concentration targets of at least 70% of the dosing interval, an important pharmacodynamic indicator of clinical success, is higher with cefepime than with other antimicrobials against Escherichia coli and Klebsiella pneumoniae strains exhibiting ESBL phenotypes. However, for non-ESBL-producing strains, there is no difference in the time above the minimum inhibitory concentration between ceftazidime and cefepime. When used appropriately in institutional settings, cefepime reduces the overall use of cephalosporins, thereby decreasing selection pressure for presumptive ESBL-producing pathogens.