A large outbreak of hantavirus pulmonary syndrome (HPS) recently occurred in the Chaco region of Paraguay. Using PCR approaches, partial virus genome sequences were obtained from 5 human sera, and spleens from 5 Calomys laucha rodents from the outbreak area. Genetic analysis revealed a newly discovered hantavirus, Laguna Negra (LN) virus, to be associated with the HPS outbreak and established a direct genetic link between the virus detected in the HPS cases and in the C. laucha rodents, implicating them as the primary rodent reservoir for LN virus in Paraguay. Virus isolates were obtained from two C. laucha, and represent the first successful isolation of a pathogenic South American hantavirus. Analysis of the prototype LN virus entire S and M and partial L segment nucleotide and deduced amino acid sequences showed that this virus is unique among the Sigmodontinae-borne clade of hantaviruses. Analysis of PCR fragments amplified from a serum sample from a Chilean HPS patient, who had recently traveled extensively in Bolivia (where C. laucha are known to occur), revealed an LN virus variant that was approximately 15% different at the nucleotide level and identical at the deduced amino acid level relative to the Paraguayan LN virus. These data suggest that LN virus may cause HPS in several countries in this geographic region.