Two outbreaks of encephalitis consistent with an etiology of Venezuelan equine encephalitis (VEE) virus occurred in equines on the Pacific coast of southern Mexico in 1993 (Chiapas State) and in 1996 (Oaxaca State). In Chiapas, there were 125 cases, of which 63 were fatal and in Oaxaca, there were 32 cases and 12 fatalities. Virus was isolated from two horses from each outbreak, including three brain isolates and one from blood. Virus isolates (93-42124, ISET-Chi93, Oax131, and Oax142) were shown by indirect immunofluorescence, hemagglutination inhibition, monoclonal antibody ELISA, and nucleotide sequencing to be VEE virus, subtype IE, a type previously thought to be equine-avirulent. Genetic characterization and phylogenetic analysis indicated that the outbreak viruses were identical or nearly identical to one another and that they were closely related to equine-avirulent IE strains from Guatemala and the Gulf coast of Mexico. In a plaque-reduction neutralization test, sera collected from healthy horses in Chiapas and Oaxaca reacted significantly better with isolate 93-42124 than with Guatemala IE isolate 68U201, suggesting that subtle genetic changes may have resulted in alteration of neutralization domains. It is not clear whether these differences may also influence equine virulence. However, renewed VEE virus subtype IE activity in Mexico, and its apparent conversion to equine virulence, underscores the need for increased surveillance, additional laboratory and epidemiologic studies in VEE-endemic regions, and possibly new vaccines.