BACKGROUND: The movement of medical education into the community has accelerated the development of a new model of general practice in which core clinical services are complemented by educational and research activities involving the whole primary care team. AIM: To compare quality indicators, workload characteristics, and health authority income of general practices involved in undergraduate medical education in east London with those of other practices in the area and national figures where available. DESIGN OF STUDY: A comprehensive survey of undergraduate and postgraduate clinical placements and practice-based research activity within general practice. SETTING: One-hundred and sixty-one practices based in East London and the City Health Authority (ELCHA). METHOD: Cross-sectional survey comparing routinely-collected information on practice resources, workload, income, and performance between teaching and non-teaching practices. RESULTS: In east London, teaching practices are larger partnerships with smaller list sizes, higher staff costs, and better quality premises than non-teaching practices. Teaching practices demonstrate significantly better performance on quality indicators, such as cervical cytology coverage and prescribing indicators. Patient-related health authority income per whole time equivalent (WTE) general practitioner (GP) is significantly lower among teaching practices. A multiple regression analysis was used to explore the association between teaching status and income. Eighty-eight per cent of the variation in patient-related income could be explained by the combination of list size, list turnover, removals at doctor's request, quality of premises, and immunisation and cytology rates. CONCLUSION: This study demonstrates that practice involvement in undergraduate education in east London is associated with higher scores on a range of organisational and performance quality indicators. The lower patient-related income of teaching practices is associated with smaller list sizes and may only be partially replaced by teaching income. Lower vacancy rates suggest that teaching practices are more attractive to doctors seeking partnerships in east London.