One of two Waimate district dairy farms placed in lockdown last week after it was suspected of having the cattle disease mycoplasma bovis has tested positive.
The disease was first discovered in July, and has so far been found on eight farms in South Canterbury and North Otago.
Tests are continuing on the second Waimate farm and another one is under suspicion.
All three farms are near the Van Leeuwen farms where the outbreak first occurred.
The Ministry for Primary Industries says all of the infected farms are under restrictions on the movement of stock and other risk goods.
Ministry for Primary Industries spokesperson David Yard said the ministry was not sure whether the infection was transmitted by stock transfers or over-the-fence animal contact.
Mr Yard said he was disappointed, but not surprised by the new infection.
"The find of the infected property is in a closely defined region within the Waimate district where we have all the other positive farms. We do potentially expect to find more, but hope to find not too many, because we believe we have the disease contained, at the very least."
Mr Yard said a complete cull of infected farms was going ahead, with the aim of completely eradicating the disease from the region.
Waimate mayor Craig Rowley said the new find was a setback.
"It would have been to get it cleaned up and eradicated quickly, but obviously, with the way this disease works, it's not going to be quite that simple. And we're obviously very disappointed by the effect on farmers, the ones that have this infectious stock, because it is going to be an imposition for them and their livelihoods."
Mr Rowley said fear was spreading in the Waimate farming community, and he wanted people to make sure they had good information, and not rely on the rumour mill.