In September 1987, patients at an outpatient dialysis center were exposed to chloramine contaminated dialysate when the carbon filter in a recently modified water treatment system failed. Forty-one patients required transfusion to treat the resultant hemolytic anemia. Epidemiologic investigation demonstrated that the mortality rate among dialysis center patients increased during the 5 months after chloramine exposure when compared with the 12 months before chloramine exposure, but no deaths could be attributed to the exposure. Chloramine is commonly used as a disinfectant in municipal water supplies, and has previously been reported to cause hemolytic anemia in patients undergoing dialysis. Hemodialysis centers in cities that use chloramine in water supplies must design water treatment systems with adequate means for removing chloramine and must monitor processed water closely to ensure that chloramine contamination does not occur. Dialysis centers that make changes in their water processing systems should evaluate all components of the system before changes are made, and must ensure that after modifications are made, processed water meets the standards set by the Association for Advancement of Medical Instrumentation.