We analyzed hospitalizations in England from April 1, 1989, to March 31, 1998, and identified approximately 700 cases, 46 fatal, from viral encephalitis that occurred during each year; most (60%) were of unknown etiology. Of cases with a diagnosis, the largest proportion was herpes simplex encephalitis. Using normal and Poisson regression, we identified six possible clusters of unknown etiology. Over 75% of hospitalizations are not reported through the routine laboratory and clinical notification systems, resulting in underdiagnosis of viral encephalitis in England. Current surveillance greatly underascertains incidence of the disease and existence of clusters; in general, outbreaks are undetected. Surveillance systems must be adapted to detect major changes in epidemiology so that timely control measures can be implemented.