To determine hepatitis E virus (HEV) infection and disease rates in the Kathmandu Valley of Nepal, serum was collected from 757 healthy Nepalese (ages 12-48 years) during March and September 1992 and September 1993. At each visit, reports of interval illness were obtained. Sera were examined for IgG to HEV, using a commercially available kit. Seroconversion was used as a marker for HEV infection, and an episode of hepatitis E was defined as a history of jaundice with seroconversion. Seroprevalence ranged from 16% to 31% and increased with age, whereas both infection and disease rates decreased with age. Infection and disease rates were as high as 99/1000 and 45/1000 person-years, respectively. These results highlight the importance of sporadic hepatitis E as a public health problem among adolescents and young adults in this region.