Objective To assess the potential deterrent effect of nursing home litigation threat on nursing home quality. Data Sources/Study Setting We use a panel dataset of litigation claims and Nursing Home Online Survey Certification and Reporting (OSCAR) data from 1995 to 2005 in six states: Florida, Illinois, Wisconsin, New Jersey, Missouri, and Delaware, for a total of 2,245 facilities. Claims data are from Westlaw's Adverse Filings database, a proprietary legal database, on all malpractice, negligence, and personal injury/wrongful death claims filed against nursing facilities. Study Design A lagged 2‐year moving average of the county‐level number of malpractice claims is used to represent the threat of litigation. We use facility fixed‐effects models to examine the relationship between the threat of litigation and nursing home quality. Principal Findings We find significant increases in registered nurse‐to‐total staffing ratios in response to rising malpractice threat, and a reduction in pressure sores among highly staffed facilities. However, the magnitude of the deterrence effect is small. Conclusions Deterrence in response to the threat of malpractice litigation is unlikely to lead to widespread improvements in nursing home quality. This should be weighed against other benefits and costs of litigation to assess the net benefit of tort reform.