People in the state's north are being warned not to eat fish from the North Esk River downstream of Corra Linn Gorge.
Poly-fluroalkyl substance (PFAS) has been found in marine life sampling, which has led to Public Health issuing advice not to consume anything caught from that stretch of the river.
"We are issuing precautionary advice not to eat any fish, including eels, caught in this stretch of the river until further notice," Director of Public Health Dr Mark Veitch said.
"This section of the North Esk River is already currently closed to recreational fishing by the Inland Fisheries Service, in accordance with the brown trout fishing season.
"PFAS was detected in two trout, an eel and one other fish species from samples taken near the dog park in St Leonards and from near Corra Linn. PFAS was not detected in two trout from upstream towards Blessington."
The chemical is not deadly, but is recommended to be avoided.
"People who have eaten fish and eels from the North Esk to date can be reassured this will not have harmed their health – but as a precaution they should no longer eat them from this area until further notice," Dr Veitch said.
"Although PFAS has not been proven to cause any specific human illnesses, the Australian Government recommends human exposure to them be minimised."
Among many applications, the substance has been used in the manufacturing of makeup and non-stick cooking surfaces.