An outbreak of watery diarrhoea accompanied by low-grade fever and weight loss in 16 preterm neonates (age range 2-20 days) admitted to a neonatal intensive care unit (NICU) over four days in August 2000 is reported. Escherichia coli having similar antibiograms were identified on routine bacterial stool cultures in 14 (87.5%) neonates and none of the other known enteropathogens were detected. An investigation was undertaken to trace the source of infection. Surveillance cultures of swabs from the utensils used to prepare milk feed, culture of the formula feed and all items handled by one particular cook yielded growth of E. coli as did culture of his hand swabs and faecal sample. The causative agent was identified as enterotoxigenic E. coli (ETEC) as toxin production could be demonstrated by reverse passive latex agglutination in all the strains of E. coli isolated both from the infected neonates and the source of infection. The outbreak was effectively controlled by appropriate therapy and institution of proper measures of hygiene after identification of the source of infection.