From mid-June through early August 1980, an outbreak of gastrointestinal illness in Red Lodge, Montana affected approximately 780 persons, as estimated from attack rates of 33 per cent and 15 per cent in urban and rural residents, respectively. Giardia lamblia was identified in stool specimens from 51 per cent of 47 persons with a history of untreated gastrointestinal illness and in 13 per cent of 24 specimens from asymptomatic persons (p = .00045, Fisher's Exact Test). The epidemic curve was bimodal with peaks in mid-June and mid-July. Each peak occurred about three weeks after an episode of very heavy water runoff resulting from warm sunny weather and snow darkened by ashfall from the Mt. St. Helens volcanic eruption of May 18, 1980. Unfiltered and inadequately chlorinated surface water was supplied by the city water system, which was implicated as the vehicle of transmission in the outbreak. Water systems providing unfiltered surface water are more likely to become contaminated during periods of heavy water runoff.