1
 
                          [SIDLEY & AUSTIN LETTERHEAD]
 
                                                                       EXHIBIT 5
 
                                 July 12, 1996
 
Board of Directors
American Shared Hospital Services
Four Embarcadero Center, Suite 3620
San Francisco, California 94111-4155
 
           Re: 330,000 Common Shares, no par value, of American Shared Hospital
               Services (the "Common Stock")
 
Gentlemen:
 
     We refer to the Registration Statement on Form S-8 (the "Registration
Statement") being filed by American Shared Hospital Services, a California
corporation (the "Company"), with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration of 330,000 common shares, no par value, of the Company (the "New
Shares"), including the registration for issuance by the Company of 64,334 New
Shares under the American Shared Hospital Services 1995 Stock Option Plan (the
"Plan") and the registration for reoffering and resale by certain holders named
therein of 265,666 New Shares issuable upon exercise of options granted under
the Plan.
 
     We have acted as counsel to the Company in connection with the Plan and the
proposed issuance and sale of the New Shares and have examined such records,
documents and questions of law, and satisfied ourselves as to such matters of
fact, as we have considered relevant and necessary as a basis for this opinion.
In addition, we have examined the originals, or photocopies, of such other
corporate records of the Company, certificates of public officials and of
officers of the Company and such agreements, instruments and other documents as
we have deemed necessary as a basis for the opinions expressed below. As to the
questions of fact material to such opinions, we have, when relevant facts were
not independently established by us, relied upon a certificate of the Company or
its officers or of public officials.
 
     Based on the foregoing, we are of the opinion that:
 
          1. The Company is duly incorporated and validly existing under the
     laws of the State of California.
 
          2. The New Shares will be, as and when issued and paid for in
     accordance with the terms and conditions of the Plan, legally issued, fully
     paid and nonassessable shares of Common Stock.
 
     We do not find it necessary for purposes of this opinion to cover, and
accordingly we express no opinion as to, the application of the securities or
"Blue Sky" laws of the various states to the sale of the New Shares. This
opinion is limited to the General Corporation Law of the State of California.
 
     We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to our firm in the Registration
Statement.
 
                                          Very truly yours,
 
                                          Sidley & Austin