In April 2000, the water supply for Yorke Peninsula in South Australia was deemed non-potable when extracts from a proliferation of the benthic cyanobacterium Phormidium aff. formosum in Upper Paskeville Reservoir were found to be lethally toxic by intraperitoneal injection into mice (400 mg kg-1). Routine water quality monitoring had failed to detect the development of the Phormidium until complaints of musty taste and odour, attributable to the production of 2-methyl-isoborneol (MIB), were received from the consumers. The 185 ML open-balancing storage, receiving filtered and chloraminated water from the River Murray, was isolated from the drinking water supply and a health alert was issued to approximately 15,000 consumers. The identity of the toxin(s) is thus far unknown, but clinical symptoms of toxicity in mice and chemical characteristics are distinct from the known major cyanotoxins. Preliminary characterisation of this toxin indicates that it has low solubility in water and organic solvents and is strongly associated with the particulate cellular material of the filaments. Toxicity of extracts was diminished by boiling and by treatment with chlorine, but not by chloramines. Further testing of floating cyanobacterial mats in the Torrens Lake in the city of Adelaide (Phormidium aff. formosum) and Myponga Reservoir (Phormidium aff. amoenum) in 2000/2001 was also found to be toxic by mouse bioassay. Toxicity is yet to be confirmed in monospecific cultured strains and further studies are required to identify the toxin and assess its health significance. Genetic characterisation of isolates has commenced in an attempt to classify their relatedness and to assist in the rapid identification of potentially toxic strains.