Conventional analyses of exploration geochemical data assume that the background is a constant or slowly changing value, equivalent to a plane or a smoothly curved surface. However, it is better to regard the geochemical background as a rugged surface, varying with changes in geology and environment. This rugged surface can be estimated from observed geological, geochemical and environmental properties by using multivariate statistics. A method of background adjustment was developed and applied to groundwater and stream sediment reconnaissance data collected from the Hot Springs Quadrangle, South Dakota, as part of the National Uranium Resource Evaluation (NURE) program. Source-rock lithology appears to be a dominant factor controlling the chemical composition of groundwater or stream sediments. The most efficacious adjustment procedure is to regress uranium concentration on selected geochemical and environmental variables for each lithologic unit, and then to delineate anomalies by a common threshold set as a multiple of the standard deviation of the combined residuals. Robust versions of regression and RQ-mode principal components analysis techniques were used rather than ordinary techniques to guard against distortion caused by outliers Anomalies delineated by this background adjustment procedure correspond with uranium prospects much better than do anomalies delineated by conventional procedures. The procedure should be applicable to geochemical exploration at different scales for other metals. ?? 1985.