Biosecurity Queensland received laboratory results last night confirming that three horses from a veterinary practice on the outskirts of Brisbane have tested positive for Hendra virus.
Two of the animals are dead, making it the worst outbreak since the 1994 deaths of trainer Vic Rails and 14 horses.
Hendra can kill within a day and is zoonotic, meaning it can cross from horses into people.
Epidemiologists are working to determine how and when the infection occurred, said Primary Industries Minister Tim Mulherin.
"We are taking the situation seriously with biosecurity inspectors moving quickly to quarantine the practice and establish thorough disinfection procedures to ensure the area is fully contained.
"We don't yet know how the virus came to be at the vet practice. However, epidemiologists are investigating and conducting complex investigations.
"We are also working with local neighbours to ensure they are aware of the situation and the quarantine," he said.
Biosecurity Queensland chief veterinary officer Ron Glanville said the case was unusual, as the horses' symptoms had not been consistent with signs seen in previous Hendra cases.
"Hendra is a serious but rare virus which occasionally affects horses. As a zoonotic disease, it can also spread from horses to humans, but that is also rare," Dr Glanville said late yesterday.
"Of those diagnosed with the virus, one horse has died, one is recovering, and one was euthanized early this evening."
Biosecurity Queensland will today sample 37 other horses at the practice. "However, the first priority is containment and disinfection," he said.
Dr Glanville said the vet practice had been quarantined as a precautionary measure after some horses displayed unusual symptoms.
While it is extremely difficult to contract the disease, staff from Queensland Health are contacting people involved with the sick horses to advise on personal health and hygiene issues associated with the disease.
The 1994 outbreak in Australia was the first time the virus had been isolated. It was named after the Brisbane suburb in which it was discovered.
The virus is believed to carried by the flying foxes, or fruit bats, found in Australia.
Three people are on record as having been infected by the disease. Two died.