Background.Varicella is highly contagious, and immunocompromised patients are at increased risk of severe illness, including disseminated disease, pneumonia, and encephalitis. We describe an outbreak of varicella with likely breakthrough disease in a population of pediatric cancer patients in October 2004.Setting.A 250-bed tertiary care pediatric facility with a 33-bed oncology unit, outpatient clinics, and affiliated group housing and schoolroom spaces.Methods.We defined varicella as an acute illness with a maculopapulovesicular rash, without other apparent cause. We defined breakthrough disease as varicella with onset more than 42 days after vaccination. Cancer patients were considered to be nonimmune if serologic test results were negative for varicella-zoster virus. Family members were considered to be nonimmune if they had no history of infection with wild-type varicella-zoster virus or of varicella vaccination.Results.In a period of approximately 16 days, varicella was detected in 7 children (the index case, 5 secondary cases, and 1 tertiary case). Of the 7 identified cases, 4 appeared to be cases of breakthrough disease in previously vaccinated children. The outbreak resulted in the exposure of 82 families at a pediatric group housing facility; 28 children at the schoolroom; and77patients, 150 family members, and 9 staff members at 3 outpatient clinics.Conclusions.This outbreak highlights the important role that breakthrough varicella can play in healthcare centers with affiliated group housing. Formal recommendations on the management of exposed individuals who have been vaccinated should be made in such settings, especially if immunocompromised hosts are present.