This study describes an outbreak of rabies in a flock of 110 sheep in Yangqu county, Shanxi province, China, in 2010. The flock, housed in a cave being used as a sheepfold, was attacked by a rabid dog, which resulted in 36 deaths over the following 2 days from the crushing and trampling caused by panic, and some 15 further deaths from rabies 2 weeks later. Rabies in the sheep was confirmed by the fluorescent antibody test (FAT) and RT-PCR. Rabies virus was isolated from the index dog brain and its N gene was partially sequenced (nucleotides 77-880). Results showed that the canine isolate (SXTYD01) was rabies virus with the N gene fragment 100% identical to that of the virus isolated from rabid sheep. This is the first confirmed sheep rabies outbreak in China. The clinical presentation of the disease is also described.