In 1989 we investigated the first instance of Pseudomonas cepacia infections due to intrinsic contamination of a povidone-iodine product. Six patients in a Texas pediatric facility had P. cepacia infection or pseudoinfection (three, peritonitis; one, pseudoperitonitis; and two, pseudobacteremia). Epidemiological studies showed one risk factor for infection of peritoneal fluid with P. cepacia: performance of peritoneal dialysis in the dialysis unit with use of one lot of povidone-iodine later found to be intrinsically contaminated (4/5 vs. 0/16, P = .001). Blood cultures yielded P. cepacia after nurses wiped the tops of blood culture bottles with the povidone-iodine solution before inoculation. P. cepacia was cultured from three povidone-iodine containers used at the hospital and from four containers of the same lot obtained from other health-care facilities in Texas and California. Isolates from patients and the povidone-iodine had similar antibiograms, identical plasmid profiles, and identical DNA banding patterns on the basis of results of ribonucleotide typing. This investigation demonstrates that intrinsic contamination of povidone-iodine solution with P. cepacia can result in infections in addition to colonization and/or pseudoinfection.