Confinement homes are private institutions that provide full-time care for newborn babies and their respective postpartum mothers up to one month after delivery. An outbreak of fever and diarrhoea amongst newborns occurred in one such confinement home in Penang between the months of September to October 2004. An outbreak investigation was carried out including all babies, their respective mothers and workers in the home to determine the source of the outbreak and to institute control measures. Based on a working case definition of febrile illness with or without diarrhoea, 11 out of the 13 babies in the confinement home met the case definition. One hundred percent had symptoms of fever. 36.4% had symptoms of diarrhea and other respiratory conditions respectively. The attack rate of among babies in the confinement home was 90%. Echovirus 11 was isolated from 3 out of the 11 febrile cases. Echovirus 11 was isolated from the cerebrospinal fluid and stool of another baby at a private hospital that was epidemiologically linked to the first case. In conclusion, the outbreak of febrile illness amongst newborn babies in the affected confinement home was due to echovirus 11. The source was probably health-care associated with efficient transmission within the confinement home. The faecal-oral route was the most likely mode of transmission.