An outbreak of necrotic dermatitis in sheep was intensively investigated. Initially 19 of 147 Letelle (Merino-type) ewes were identified but closer inspection revealed 57 sheep that had skin lesions, some very slight, and that the majority (46 or 80%) had lesions only above the lips. A small number of them had multiple lesions on the legs or vulvae apart from lip lesions. Seven had only vulvar lesions and 2 only leg lesions. Among the sheep with lip lesions, twice as many had lesions on the right as on the left. Electron micrographs did not reveal any virus particles from the lesions, but all bacterial swabs yielded pure cultures of beta-haemolytic, Gram-positive cocci that were catalase, coagulase and DNase positive. The organism was identified as Staphylococcus aureus. Histopathology was consistent with a dermotoxic insult. A review of available literature indicated that this outbreak was consistent with a diagnosis of ovine necrotic (staphylococcal) dermatitis, supported by data on signalment, lesions, distribution, size, number, epidemiology as well as specific tests. The range of differential diagnoses and possible confusers are discussed.