A newly described organism called CLB (coccidian-like or cyanobacterium-like body) has been identified in cases of prolonged diarrhoea. To confirm an association of CLB with disease and identify risk factors for transmission, we conducted a case-control study of travellers and foreign residents at two outpatient clinics in Kathmandu, Nepal. Patients without diarrhoea were matched to CLB cases by clinic and date of visit. For comparison, patients with other causes of diarrhoea were also studied. Stools were examined for enteric pathogens with standard microbiological and molecular genetic techniques. CLB was identified in 108 (11%) of 964 individuals with gastrointestinal symptoms compared with only 1 (1%) of 96 symptom-free controls (p = 0.003). 7% of residents in the US Embassy community acquired the infection. The diarrhoeal illness associated with CLB lasted a median of 7 weeks (interquartile range 4-9) compared with 9 days (4-19) for individuals with other causes of diarrhoea (p < 0.0001). The prevalence of other enteric pathogens was no higher among CLB cases than among symptom-free controls. Patients with CLB infection were more likely than controls to report consumption of untreated water (odds ratio 3.98; 95% CI 1.29-13.14); organisms of the same appearance were identified in an epidemiologically implicated water sample. The significant association of CLB with prolonged diarrhoea, and the low rate of other enteropathogens in CLB cases, strongly supports the hypothesis that CLB is a new pathogen. Epidemiological and environmental data suggest that the organism is waterborne.