Between 2011 and 2013, three breeders of variegated squirrels (Sciurus variegatoides) had encephalitis with similar clinical signs and died 2 to 4 months after onset of the clinical symptoms. With the use of a metagenomic approach that incorporated next-generation sequencing and real-time reverse-transcriptase quantitative polymerase chain reaction (RT-qPCR), the presence of a previously unknown bornavirus was detected in a contact squirrel and in brain samples from the three patients. Phylogenetic analyses showed that this virus, tentatively named variegated squirrel 1 bornavirus (VSBV-1), forms a lineage separate from that of the known bornavirus species. (Funded by the Federal Ministry of Food and Agriculture [Germany] and others.).