In July 1995 we investigated a pneumonia outbreak in a Pennsylvania town. We conducted epidemiological and molecular microbiological studies to determine the outbreak source and interrupt transmission of disease. Legionnaires' disease (LD) was quickly identified by urine antigen testing, and a newly developed immunohistochemical stain confirmed nosocomial transmission to a hospital inpatient. LD was confirmed in 22 patients. Case-patients were more likely than controls to have been within 1,000 feet of the hospital (matched odds ratio, 21.0; 95% confidence interval, 2.9-368) during the 2 weeks prior to illness. Legionella pneumophila serogroup 1 (Lp-1) was isolated from hospital cooling towers (CTs) and rooftop air samples but not from hospital potable water or community CTs. Hospital CT and air Lp-1 isolates matched all five patient isolates by monoclonal antibody, arbitrarily primed polymerase chain reaction, and pulsed-field gel electrophoresis subtyping. Strategies to prevent LD must include minimizing transmission from CTs.