An outbreak of highly pathogenic avian influenza (HPAI) virus subtype H5N1 was first diagnosed in a “backyard” flock of peafowl (Pavo cristatus) raised on palace premises in the Kingdom of Saudi Arabia in December 3, 2007. The flock consisted of 40 peafowl, and their ages ranged from 3 to 5 years old. Affected birds suffered from depression, anorexia, and white diarrhea. Four dead birds were submitted for HPAI diagnosis at the Central Veterinary Diagnostic Laboratory in Riyadh. Brain and liver tissues and tracheal and cloacal swabs were taken from the dead birds and processed for a real-time reverse transcriptase (RT)-PCR test and virus isolation in specific-pathogen-free embryonating chicken eggs. The H5N1 subtype of avian influenza virus was isolated from the four dead birds and identified by a real-time RT-PCR before and after egg inoculation. The virus isolates were characterized as HPAI H5N1 virus by sequencing analysis. Phylogenetic comparisons revealed that the H5N1 viruses isolated from peafowl belong to the genetic clade 2.2 according to the World Health Organization nomenclature. The peafowl H5N1 virus falls into 2.2.2 sublineage II and clusters with the H5N1 viruses isolated from poultry in Saudi Arabia in 2007–08.