Scabies is an ectoparasitic, highly contagious skin disease caused by a mite called Sarcoptes scabiei. The insecticides ivermectin and permethrin are commonly used for treatment of scabies. This study aimed at comparing the efficacy of oral ivermectin with topical permethrin in treating scabies. Two hundred and forty-two patients with scabies attending the dermatology outpatient department of Sina Hospital, Tabriz University of Medical Sciences were admitted. Patients were divided into two groups randomly. The first group and their family contacts received 5% permethrin cream and the other received oral ivermectin. Treatment was evaluated at intervals of 2 and 4 weeks. A single dose of ivermectin provided a cure rate of 85.9% at a 2-week interval, which increased to 100% after crossing over to the permethrin group at a 4-week interval. Twice application of permethrin with a 1-week interval was effective in 92.5% of patients, which increased to 94.2% after crossing over to the ivermectin group at a 4-week interval. Permethrin-treated patients recovered earlier. Twice application of permethrin with a 1-week interval is superior to a single dose of ivermectin. The temporal dissociation in clinical response suggests that ivermectin may not be effective against all the stages in the life cycle of the parasite.