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Background: Japanese encephalitis (JE) is presumed to be endemic throughout Asia, yet only a few cases have been reported in tropical Asian countries such as Indonesia, Malaysia and the Philippines. To estimate the true disease burden due to JE in this region, we conducted a prospective, hospital-based surveillance with a catchment population of 599,120 children less than 12 years of age in Bali, Indonesia, from July 2001 through December 2003. Methods: Balinese children presenting to any health care facility with acute viral encephalitis or aseptic meningitis were enrolled. A "confirmed" diagnosis of JE required the detection of JE virus (JEV)-specific IgM in cerebrospinal fluid, whereas a diagnosis of "probable JE" was assigned to those cases in which JEV-specific IgM was detected only in serum. Results: In all, 86 confirmed and 4 probable JE cases were identified. The annualized JE incidence rate was 7.1 and adjusted to 8.2 per 100,000 for children less than 10 years of age over the 2.5 consecutive years of study. Only one JE case was found among 96,920 children 10-11 years old (0.4 per 100,000). Nine children (10%) died and 33 (37%) of the survivors had neurological sequelae at discharge. JEV was transmitted in Bali year-round with 70% of cases in the rainy season. Conclusion: JE incidence and case-fatality rates in Bali were comparable to those of other JEendemic countries of Asia. Our findings contradict the common wisdom that JE is rare in tropical Asia. Hence, the geographical range of endemic JE is broader than previously described. The results of the study support the need to introduce JE vaccination into Bali. [ABSTRACT FROM AUTHOR]