Between November 2010 and January 2011, triploid Crassostrea gigas (Pacific oysters) cultivated in the Georges River, New South Wales, experienced >95% mortality. Mortalities also occurred in wild diploid C. gigas in the Georges River and shortly thereafter in the adjacent Parramatta River estuary upstream from Sydney Harbour. Neighbouring Saccostrea glomerata (Sydney rock oysters) did not experience mortalities in either estuary. Surviving oysters were collected to investigate the cause of mortalities. Histologically all oysters displayed significant pathology, and molecular testing revealed a high prevalence of ostreid herpesvirus-1 (OsHV-1). Quantitative PCR indicated that many C. gigas were carrying a high viral load at the time of sampling, while the load in S. glomerata was significantly lower (p < 0.001). Subsequent in situ hybridisation experiments confirmed the presence of a herpesvirus in C. gigas but not S. glomerata tissues, suggesting that S. glomerata is not susceptible to infection with OsHV-1. Naïve sentinel triploid C. gigas placed in the Georges River estuary in January 2011 quickly became infected and experienced nearly 100% mortality within 2 wk of exposure, indicating the persistence of the virus in the environment. Phylogenetic analysis of sequences derived from the C2/C6 region of the virus revealed that the Australian strain of OsHV-1 belongs to the microvariant (µ-var) cluster, which has been associated with severe mortalities in C. gigas in other countries since 2008. Environmental data revealed that the Woolooware Bay outbreaks occurred during a time of considerable environmental disturbance, with increased water temperatures, heavy rainfall, a toxic phytoplankton bloom and the presence of a pathogenic Vibrio sp. all potentially contributing to oyster stress. This is the first confirmed report of OsHV-1 µ-var related C. gigas mortalities in Australia.