Image quality, resolution and sensitivity of a scintillation camera equipped with various collimators have been investigated using high purity 123I. Pulse height distributions of 123I from a thyroid phantom partly in air and partly immersed in water demonstrate the substantial septa penetration of the 440 and 529 keV gamma rays of 123I with high resolution collimators. Line spread functions recorded first with the line source in air and then in water show that the area under the 'wings' is attributed mainly to septa penetration but with a marked contribution from scattering in water. The modulation transfer function evaluated from the line spread functions shows a sudden drop at low frequencies for high resolution collimators due to their high degree of septa penetration. The two concepts of 'figure of merit' also used are Qb=Sa [MTF]2, where Sa is the plane sensitivity and Qc=S2/(S+2B), where S is the true signal from the object and B is the total background or noise due to septa penetration and scatter. The image reproduction per unit time which is described by Qb is best for a high resolution converging collimator. The statistical accuracy per unit time which is used in dynamic studies is described by Qc and is best for a medium energy collimator.