Standard short course chemotherapy is recommended by the World Health Organization to control tuberculosis worldwide. However, in settings with high drug resistance, first line standard regimens are linked with high treatment failure. We evaluated treatment outcomes after standardized chemotherapy with the WHO recommended category II retreatment regimen in a prison with a high prevalence of drug resistant tuberculosis (TB). A cohort of 233 culture positive TB patients was followed through smear microscopy, culture, drug susceptibility testing and DNA fingerprinting at baseline, after 3 months and at the end of treatment. Overall 172 patients (74%) became culture negative, while 43 (18%) remained positive at the end of treatment. Among those 43 cases, 58% of failures were determined to be due to treatment with an inadequate drug regimen and 42% to either an initial mixed infection or re-infection while under treatment. Overall, drug resistance amplification during treatment occurred in 3.4% of the patient cohort. This study demonstrates that treatment failure is linked to initial drug resistance, that amplification of drug resistance occurs, and that mixed infection and re-infection during standard treatment contribute to treatment failure in confined settings with high prevalence of drug resistance.