Typhoid fever is endemic in the South Pacific. We investigated an outbreak in Nauru. Through interviews and medical records, we identified 50 persons with onset between 1 October 1998 and 10 May 1999, of fever lasting [ges ]3 days and one other symptom. Salmonella Typhi was isolated from 19 (38%) cases. Thirty-two (64%) patients were school-aged children, and 17 (34%) were in four households. Case-control studies of (a) culture-confirmed cases and age- and neighbourhood-matched controls; and (b) household index cases and randomly selected age-matched controls implicated two restaurants: Restaurant M (matched OR [MOR] = 11, 95% confidence interval [CI] = 1·3–96) and Restaurant I (MOR = 5·8, 95% CI = 1·2–29). Food-handlers at both restaurants had elevated anti-Vi antibody titres indicative of carrier state. The annual incidence was 5·0/l000 persons. Outbreak-associated costs were $46000. Routine or emergency immunization campaigns targeting school-aged children may help prevent or control outbreaks of typhoid fever in endemic disease areas.