Concerns have been voiced about an impending oversupply of physicians in the United States. Do these concerns also apply to California, a state with many unique demographic characteristics? We examined trends in physician supply and medical education in California and the United States between 1980 and 1995 to better inform the formulation of workforce policies appropriate to the state's requirements for physicians. We found that similar to the United States, California has more than an ample supply of physicians in the aggregate, but too many specialists, too few underrepresented racial/ethnic minority physicians, and poor distribution of physicians across the state. However, recent growth in the supply of practicing physicians and resident physicians per capita in California has been much less dramatic than in the country overall. The state's unusually high rate of population growth has enabled California, unlike the United States as a whole, to absorb large increases in the number of practicing physicians and residents during 1980 to 1995 without substantially increasing the physician-to-population ratio. Due to a projected slowing of the state's rate of population growth, the supply of physicians per capita in the state will begin to rise steeply in coming years unless the state implements prompt reductions in the production of specialists. An immediate 25% reduction in specialist residency positions would be necessary to bring the state's supply of practicing specialists in line with projected physician requirements for the state by 2020. We conclude that major changes will be required if the state's residency programs and medical schools are to produce the number and mix of physicians the state requires. California's medical schools and residency programs will need to act in concert with federal and state government to develop effective policies to address the imbalance between physician supply and state requirements.