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Comparative effectiveness research, medical product safety evaluation, and quality measurement will require the ability to use electronic health data held by multiple organizations. There is no consensus about whether to create regional or national combined (eg, “all payer”) databases for these purposes, or distributed data networks that leave most Protected Health Information and proprietary data in the possession of the original data holders.Demonstrate functions of a distributed research network that supports research needs and also address data holders concerns about participation. Key design functions included strong local control of data uses and a centralized web-based querying interface.We implemented a pilot distributed research network and evaluated the design considerations, utility for research, and the acceptability to data holders of methods for menu-driven querying. We developed and tested a central, web-based interface with supporting network software. Specific functions assessed include query formation and distribution, query execution and review, and aggregation of results.This pilot successfully evaluated temporal trends in medication use and diagnoses at 5 separate sites, demonstrating some of the possibilities of using a distributed research network. The pilot demonstrated the potential utility of the design, which addressed the major concerns of both users and data holders. No serious obstacles were identified that would prevent development of a fully functional, scalable network.Distributed networks are capable of addressing nearly all anticipated uses of routinely collected electronic healthcare data. Distributed networks would obviate the need for centralized databases, thus avoiding numerous obstacles.