We investigated an outbreak of encephalitis in Tangail District, Bangladesh. We defined case-patients as persons from the outbreak area in whom fever developed with new onset of seizures or altered mental status from December 15, 2004, through January 31, 2005. Twelve persons met the definition; 11 (92%) died. Serum specimens were available from 3; 2 had immunoglobulin M antibodies against Nipah virus by capture enzyme immunoassay. We enrolled 11 case-patients and 33 neighborhood controls in a case-control study. The only exposure significantly associated with illness was drinking raw date palm sap (64% among case-patients vs. 18% among controls, odds ratio [OR] 7.9, p = 0.01). Fruit bats (Pteropus giganteus) are a nuisance to date palm sap collectors because the bats drink from the clay pots used to collect the sap at night. This investigation suggests that Nipah virus was transmitted from P. giganteus to persons through drinking fresh date palm sap.