The purpose of this investigation was to describe the first documented carbapenem-resistant Klebsiella pneumoniae (CRKP) outbreak in a tertiary care facility in Saudi Arabia. We initiated a prospective study to follow all cases of CRKP as well as the active surveillance of patients in areas where cases were identified. We also conducted a retrospective review of the microbiology database for any missed cases of CRKP. Pulsed field gel electrophoresis (PFGE) was conducted for the available CRKP isolates. During March 2010, a cluster of eight CRKPs was detected primarily in the adult intensive care unit (ICU). Patients with CRKPs were put under strict contact isolation, along with appropriate infection control measures. A retrospective review of K. pneumoniae isolates over the previous 6 months revealed two more CRKPs. The PFGE results during the outbreak period showed that the majority of strains were genetically indistinguishable or closely related. The majority of patients had prolonged hospital stay (91%), indwelling devices (81%), surgical procedures (74%), carbapenem use (62%), and colonization/infection with other multiple drug-resistant organisms (MDROs) (57%). Two-fifths of patients with CRKP had clinical infection and 38% died during the current hospitalization. Contact isolation, hand hygiene, environmental cleaning, and staff education may control CRKP outbreak in the acute care setting, but did not prevent endemicity.