Understanding the behavior of Cryptosporidium oocysts in the environment is critical to developing improved watershed management practices for protection of the public from waterborne cryptosporidiosis. Analytical methods of improved specificity and sensitivity are essential to this task. We developed a nested PCR-restriction fragment length polymorphism assay that allows detection of a single oocyst in environmental samples and differentiates the human pathogen Cryptosporidium parvum from other Cryptosporidium species. We tested our method on surface water and animal fecal samples from the Wachusett Reservoir watershed in central Massachusetts. We also directly compared results from our method with those from the immunofluorescence microscopy assay recommended in the Information Collection Rule. Our results suggest that immunofluorescence microscopy may not be a reliable indicator of public health risk for waterborne cryptosporidiosis. Molecular and environmental data identify both wildlife and dairy farms as sources of oocysts in the watershed, implicate times of cold water temperatures as high-risk periods for oocyst contamination of surface waters, and suggest that not all oocysts in the environment pose a threat to public health.