Hypovolemic hyponatremia attributable to severe fluid and electrolyte alterations was diagnosed in a foal with diarrhea. Subsequent consumption of water resulted in rapid reduction of serum sodium concentration and serum osmolar depression. Clinical signs of neurologic disease developed including blindness, loss of menace response, and seizures. Treatment of this condition with IV administered fluids included hypertonic saline solution (7.2%; 2 ml/kg of body weight), and frequent monitoring of serum electrolyte concentrations and osmolality resulted in gradual correction of the fluid and electrolyte imbalance and resolution of the neurologic signs. Hyponatremia has been recognized in foals with renal failure, ruptured urinary bladder, and iatrogenic water overload. The key to diagnosis and management of profound hyponatremia is accurate diagnosis of the status of plasma volume and association of the electrolyte imbalance with clinical signs of neurologic disease. This report describes an unusual complication of a commonly encountered problem in equine practice and documents that the severe metabolic and electrolyte abnormalities associated with diarrhea can result in clinical neurologic disease. The differential diagnosis also should include bacterial sepsis, parasitism, thoracic mass, acute renal failure, congenital neurologic deficit, or seizure syndrome. Serum electrolyte disorders should be considered as a potential cause of signs of neurologic disease in foals with diarrhea.