Giardiasis is a common waterborne gastrointestinal illness. In 2007, a community giardiasis outbreak occurred in New Hampshire, USA. We conducted a cohort study to identify risk factors for giardiasis, and stool and environmental samples were analysed. Consuming tap water was significantly associated with illness (risk ratio 4·7, 95% confidence interval 1·5–14·4). Drinking-water samples were coliform-contaminated and a suspect Giardia cyst was identified in a home water filter. One well was coliform-contaminated, and testing indicated that it was potentially under the influence of surface water. The well was located 12·5 m from a Giardia-contaminated brook, although the genotype differed from clinical specimens. Local water regulations require well placement at least 15 m from surface water. This outbreak, which caused illness in 31 persons, represents the largest community drinking-water-associated giardiasis outbreak in the USA in 10 years. Adherence to well placement regulations might have prevented this outbreak.