Outbreaks of H5N1 avian influenza show strong seasonality. It is not clear where the source of virus originates from in each new outbreak season. This study sought to understand the nature of viral resurgence in recent outbreak seasons in Thailand, where the epidemic is relatively well controlled. In such a situation, indigenous viruses surviving the inter-outbreak season would have to pass through a bottleneck. In order to look for evidence of the bottleneck effect, viral genome sequences from recent outbreaks in the country were analysed. H5N1 avian influenza viruses were isolated from six outbreaks in the rainy season and winter of 2007 through to early 2008. Most of the outbreaks were in the Yom-Nan River basin in the southern part of the northern region of the country. Sequences of these viral isolates were identified as clade 1, genotype Z, similar to viruses from previous years in the central region of the country. The sequences clustered into two groups, one of which was closely related to viruses isolated from the same area in July 2006. These analyses indicated that there was a strong bottleneck effect on the virus population and that only a few lineages remained in the area. In addition, evidence of reassortment among these viruses was found. These indicated re-emergence of viruses from a small pool of indigenous sources that had been silently perpetuated over the dry summer months. Therefore, an approach to eradicate H5N1 avian influenza from the area by eliminating these local reservoirs may be feasible and should be seriously considered.