Dam construction and associated flooding along rivers can alter ecosystems and pose serious threats to the welfare and health of local populations. This article describes a severe gastroenteritis epidemic in the Paulo Afonso region of Brazil's Bahia State related to flooding of the newly constructed Itaparica Dam's reservoir in 1988. Some 2,000 gastroenteritis cases, 88 of which resulted in death, were reported over a 42-day period. Responding to the outbreak, clinical data and water sample test results were reviewed; blood and fecal specimens from gastroenteritis patients were subjected to bacteriologic, virologic, and toxicologic testing; and drinking water samples were examined for microorganisms and heavy metals. The results revealed that the source of the outbreak was water impounded by the dam and pointed to toxin produced by cyanobacteria as the responsible agent. Proliferation of these microbes, present at concentrations of 1,104 to 9,755 standard cyanobacterial units per milliliter in untreated water, appears to have been encouraged by the decomposing biomass and other conditions prevailing in the newly flooded reservoir area.