We conducted an epidemiological study of a Japanese encephalitis (JE) outbreak in the southwestern part of Nepal in 1997. A high density of JE infections was found and it was estimated that 27·9% the total population were infected with JE virus in the study area. The fatality rate was 13·2% and there was no difference in the fatality rate between males and females over 5 years old. However, the case fatality rate was 2·1 times higher in females than in males (14·6% vs. 6·9%) among children under 5 years of age. Fifty-three blood samples were collected from suspected JE cases during the epidemic period in 1998. Findings for JE specific IgM revealed that clinical diagnoses of JE were serologically confirmed in an average 78% (70–93%) of patients in three collaborating hospitals. These studies demonstrated that JE was highly prevalent in the area and clinical diagnoses were reliable. Effective preventive measures should be taken against this vaccine-preventable disease.