I just bought canon SD850 IS digital camera and my pictures seem to come out grainy.what can i do to fix this?

If you are using Auto or ISO High, your camera will automatically raise the ISO in lower light, hence the graininess or noise.
To fix this, you need to turn your mode dial to M and select a low ISO (80-100).
However, this ISO will be much too low to use in low lighting conditions without flash. So, make sure you use the flash or raise your ISO a little higher (400-800 perhaps).
Experimentation with all ISO settings is the best way to find out what your camera can deliver and what it's limits are.
Also, make sure your digital zoom is disabled (this is done in the Menu).

great choice of camera btw....good luck...

check to make sure the iso isnt set over 100..and that you did NOT use digital zoom.

don't use the high iso setting