A decline in the watertable due to a long period of low rainfall, and the disturbance of sulfidic peat soils by dewatering and excavation in the Perth suburb of Stirling, has led to widespread acidification of groundwater at the watertable in a residential area and contamination of groundwater by arsenic and metals. The acidification has been caused by the oxidation of sulfide minerals within the peat, which contains up to 15% by weight of oxidiseable sulfur. Groundwater of pH 1.9 has been measured in shallow monitoring bores in the area, as well as high arsenic (up to 7 mg/L), aluminium (up to 290 mg/L), and iron (up to 1300 mg/L) concentrations. Contaminated groundwater pumped from affected domestic garden bores caused plant deaths in gardens and has given rise to health concerns because of high arsenic and metal concentrations. Drilling has indicated that acidic groundwater generally extends 5–10 m below the watertable, and that deeper groundwater is currently unaffected by contamination. As groundwater forms 70% of Perth’s total water usage and sulfide-rich peat soils are common in the region, acid sulfate soil risk maps and management policies need to be developed and implemented as a matter of urgency to prevent similar acidity problems occurring elsewhere in Perth.