Abstract Background The roll-out of antiretroviral therapy (ART) in Africa will have significant resource implications arising from its impact on demand for healthcare services. Existing studies of healthcare utilization on HAART have been conducted in the developed world, where HAART is commenced when HIV illness is less advanced. Methods This paper describes healthcare utilization from program entry by treatment-naïve patients in a peri-urban settlement in South Africa. Treatment criteria included a CD4 cell count <200 cells/μl or an AIDS-defining illness. Data on health service utilization were collected retrospectively from the primary-care clinic and secondary and tertiary referral hospitals. Hospital visits were reviewed to determine the clinical reason for each visit. Results 212 patients were followed for a median of 490 days. Outpatient visits per 100 patient years of observation (PYO), excluding scheduled primary-care follow-up, fell from 596 immediately prior to ART to 334 in the first 48 weeks on therapy and 245 thereafter. Total inpatient time fell from 2,549 days per 100 PYO pre-ART to 476 in the first 48 weeks on therapy and 73 thereafter. This fall in healthcare utilization occurred at every level of care. The greatest causes of utilization were tuberculosis, cryptococcal meningitis, HIV-related neoplasms and adverse reactions to stavudine. After 48 weeks on ART demand reverted to primarily non-HIV-related causes. Conclusion Utilization of both inpatient and outpatient hospital services fell significantly after commencement of ART for South African patients in the public sector, with inpatient demand falling fastest. Earlier initiation might reduce early on-ART utilization rates.