This paper describes a case of severe encephalitis in a 3-year-old Panamanian boy infected with the Indiana serotype of vesicular stomatitis virus. The virus was recovered from the child's throat on the fifth day of illness and a rise in neutralizing antibody titer was demonstrated in paired serum specimens. This is the second report of childhood encephalitis associated with vesicular stomatitis virus infection. These suggest that infection with vesicular stomatitis viruses may cause severe disease. Human infection with vesicular stomatitis viruses is common throughout the tropical Americas.