Sheep are important in the epidemiology of Toxoplasma gondii infection, but little is known of ovine toxoplasmosis in Brazil. Antibodies to T. gondii were assayed in sera of 495 sheep from 36 counties of São Paulo state, Brazil, using the modified agglutination test (MAT titer ≥1:25); 120 (24.2%) sheep tested positive. Samples of brain, heart, and diaphragm of 82 seropositive sheep were pooled, digested in pepsin, and bioassayed in mice. Toxoplasma gondii was isolated from tissue homogenates of 16 sheep, and the isolates were designated TgShBr 1–16. Six of the 16 T. gondii isolates killed 100% of infected mice. Results indicate that asymptomatic sheep can harbor mouse-virulent T. gondii; hence, they can serve as a source of infection for humans.