Three hundred fifty residents of Rome, New York, had laboratory-confirmed cases of giardiasis between 1 November 1974 and 7 June 1975. A random household survey showed an overall attack rate for giardiasis (defined as a diarrheal illness of 5 days or more) of 10.6%. A significant association was discovered between having giardiasis and using city water and between having illness and drinking 1 or more glasses of water a day. The presence of human settlements in the Rome watershed area suggested that the water supply could have been contaminated by untreated human waste. The infectivity of municipal water was confirmed by producing giardiasis in specific pathogen-free dogs fed sediment samples of raw water obtained from an inlet of a city reservoir. A microscopic examination of the water sediments uncovered a Giardia lamblia cyst in one sample. This was the first time that a G. lamblia cyst has been found in municipal water in an epidemic and the first time that such water has been shown to infect laboratory animals.