In 2008, a large Salmonella outbreak caused by contamination of the municipal drinking water supply occurred in Alamosa, Colorado. The objectives of this assessment were to determine the full economic costs associated with the outbreak and the long-term health impacts on the community of Alamosa. We conducted a postal survey of City of Alamosa (2008 population: 8,746) households and businesses, and conducted in-depth interviews with local, state, and nongovernmental agencies, and City of Alamosa healthcare facilities and schools to assess the economic and long-term health impacts of the outbreak. Twenty-one percent of household survey respondents (n = 369/1,732) reported diarrheal illness during the outbreak. Of those, 29% (n = 108) reported experiencing potential long-term health consequences. Most households (n = 699/771, 91%) reported municipal water as their main drinking water source at home before the outbreak; afterwards, only 30% (n = 233) drank unfiltered municipal tap water. The outbreak's estimated total cost to residents and businesses of Alamosa using a Monte Carlo simulation model (10,000 iterations) was approximately $1.5 million dollars (range: $196,677-$6,002,879), and rose to $2.6 million dollars (range: $1,123,471-$7,792,973) with the inclusion of outbreak response costs to local, state and nongovernmental agencies and City of Alamosa healthcare facilities and schools. This investigation documents the significant economic and health impacts associated with waterborne disease outbreaks and highlights the potential for loss of trust in public water systems following such outbreaks.