The capybara (Hydrochaeris hydrochaeris) is a large rodent used for human consumption in certain areas of South America. In the present study, viable Toxoplasma gondii was isolated for the first time from this host. Antibodies to T. gondii were assayed in the sera of 64 capybaras from 6 counties of São Paulo State, Brazil, using the modified agglutination test (MAT, ≥1:25 dilution) and the indirect fluorescent antibody test (IFAT, ≥1:16 dilution), and antibodies were found in 48 (75%) by MAT, and 49 (76.6%) by IFAT. Samples of brain, heart, and tongue of 40 seropositive capybaras were pooled, digested in pepsin, and bioassayed in mice. Toxoplasma gondii was isolated from tissue homogenates of 36 capybaras, and the isolates were designated TgCyBr1-36. Most isolates were lethal to mice; 17 of the 36 isolates killed 100% of infected mice, 11 isolates caused mortality in 25–90% of infected mice, and 8 isolates were nonpathogenic to mice. Results indicate that asymptomatic capybaras can harbor mouse-virulent T. gondii, and hence they can serve as a source of infection for humans.