Thalamic stimulation and thalamotomy for treatment of tremor due to Parkinson's disease, essential tremor, and multiple sclerosis were compared in a randomized trial. The symptomatic and functional outcome was studied after 5 years of follow-up. Sixty-eight patients were treated (45 Parkinson's disease, 13 essential tremor, 10 multiple sclerosis) by thalamotomy (n = 34) or thalamic stimulation (n = 34). After 5 years, 48 patients were available for follow-up. The primary outcome measure was change in functional status measured by the Frenchay Activities Index (FAI), scores ranging from 0 to 60. Secondary outcome measures were tremor severity, frequency of complications, and patients' assessment of the outcome. The mean difference in FAI scores between thalamic stimulation and thalamotomy was 4.4 (95% CI: 1.1–7.7) after 6 months, 3.3 (95% CI: −0.03–6.6) after 2 years and 4.0 (95% CI: 0.3–7.7) after 5 years in favor of stimulation. Tremor suppression was equally effective after both procedures, and stable in Parkinson patients. In ET and multiple sclerosis, a diminished effect of stimulation was observed in half of the patients. There were six stimulation equipment-related complications, but neurological side effects of surgery were higher after thalamotomy. Subjective outcome-assessment by the patients was more favorable in the stimulation group. © 2008 Movement Disorder Society.