During May 1998, we conducted a case-control study of 357 participants from 60 households during an outbreak of acute bartonellosis in the Urubamba Valley, Peru, a region not previously considered endemic for this disease. Blood and insect specimens were collected and environmental assessments were done. Case-patients (n = 22) were defined by fever, anemia, and intra-erythrocytic coccobacilli seen in thin smears. Most case-patients were children (median age = 6.5 years). Case-patients more frequently reported sand fly bites than individuals of neighboring households (odds ratio [OR] = 5.8, 95% confidence interval [CI] = 1.2-39.2), or members from randomly selected households > or = 5 km away (OR = 8.5, 95% CI = 1.7-57.9). Bartonella bacilliformis isolated from blood was confirmed by nucleotide sequencing (citrate synthase [g/tA], 338 basepairs). Using bacterial isolation (n = 141) as the standard, sensitivity, specificity, and positive predictive value of thin smears were 36%, 96%, and 44%, respectively. Patients with clinical syndromes compatible with bartonellosis should be treated with appropriate antibiotics regardless of thin-smear results.