In autumn 2002, an outbreak of probable psittacosis occurred among residents of the Blue Mountains district, Australia. We conducted a case-control study to determine independent risk factors for psittacosis by comparing exposures between hospitalized patients and other residents selected randomly from the telephone directory. Of the 59 case-patients with laboratory results supportive of psittacosis, 48 participated in a case-control study with 310 controls. Independent risk factors were residence in the upper Blue Mountains (odds ratio [OR] 15.2, 95% confidence interval [CI] 5.6-41.7), age of 50-64 years (OR 3.9, 95% CI 1.5-10.5), direct contact with wild birds (OR 7.4, 95% CI 2.5-22), and mowing lawns without a grass catcher (OR 3.2, 95% CI 1.3-8.0). Protective equipment is recommended for residents in areas frequented by free-ranging birds if contact with birds and their droppings is likely when performing outdoor activities such as lawn mowing.