We report the first proven outbreak of Japanese encephalitis (JE) occurring in the Kathmandu Valley of Nepal. During September and October 1995, we treated 15 patients with meningo-encephalitis. All of the patients were Nepalese, all but one lived in the Kathmandu Valley, and their overall mortality was 53%. Anti-JE virus (JEV) IgM in the cerebrospinal fluid was found in the two cases for whom it was tested. The two tested patients were similar to the other patients in clinical presentation and in home location. We recommend immunization against JEV for those traveling to Kathmandu during the months of August to October.