Clinical health information technologies (HIT) are widely viewed as essential tools for improving the quality and efficiency of health care delivery. Medicaid agencies make substantial investments in information technology (IT), have much to gain through the widespread use of clinical HIT, and can have significant influence on the adoption of HIT by providers. Medicaid agencies, however, face legal, regulatory, and financing challenges in relation to supporting HIT adoption, use, standardization, and interoperability. This article summarizes the issues related to Medicaid's participation and support of clinical HIT, and makes recommendations for addressing policy challenges at the State and Federal level.