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OBJECTIVE To identify the source of a pseudo-outbreak of Mycobacterium gordonae DESIGN Outbreak investigation. SETTING University Hospital in Chicago, Ilinois. PATIENTS Hospital patients with M. gordonae-positive clinical cultures. METHODS An increase in isolation of M. gordonae from clinical cultures was noted immediately following the opening of a newly constructed hospital in January 2012. We reviewed medical records of patients with M. gordonae-positive cultures collected between January and December 2012 and cultured potable water specimens in new and old hospitals quantitatively for mycobacteria. RESULTS Of 30 patients with M. gordonae-positive clinical cultures, 25 (83.3%) were housed in the new hospital; of 35 positive specimens (sputum, bronchoalveolar lavage, gastric aspirate), 32 (91.4%) had potential for water contamination. M. gordonae was more common in water collected from the new vs. the old hospital [147 of 157 (93.6%) vs. 91 of 113 (80.5%), P=.001]. Median concentration of M. gordonae was higher in the samples from the new vs. the old hospital (208 vs. 48 colony-forming units (CFU)/mL; P<.001). Prevalence and concentration of M. gordonae were lower in water samples from ice and water dispensers [13 of 28 (46.4%) and 0 CFU/mL] compared with water samples from patient rooms and common areas [225 of 242 (93%) and 146 CFU/mL, P<.001]. CONCLUSIONS M. gordonae was common in potable water. The pseudo-outbreak of M. gordonae was likely due to increased concentrations of M. gordonae in the potable water supply of the new hospital. A silver ion-impregnated 0.5-μm filter may have been responsible for lower concentrations of M. gordonae identified in ice/water dispenser samples. Hospitals should anticipate that construction activities may amplify the presence of waterborne nontuberculous mycobacterial contaminants.