As in many developing countries, the AIDS epidemic in Mexico has become a major public health problem. Given the competition for scarce health resources in Mexico, where hospitals are overcrowded and care for AIDS patients is often unavailable, planning depends on accurate estimates of the incidence of AIDS and the prevalence of HIV-1 infection. This article presents estimates of AIDS incidence in Mexico corrected for delays in reporting and short-term projections based on the corrected AIDS incidence. Trends in incidence cannot be assessed without such correction because only about 50% of AIDS cases are reported within 4 months of diagnosis. In addition to information on AIDS incidence, short-term projections also require estimates of the latency distribution between infection with HIV-1 and onset of AIDS. Latency periods with medians of 8 and 10 years lead to estimates that 22,000 and 24,000 new AIDS cases infected before June 1989 will be diagnosed between 1989 and 1994.