From March to May 2006, type 1 circulating vaccine-derived poliovirus (cVDPV) was isolated from one case patient with acute flaccid paralysis (AFP) and six unimmunized healthy contacts in isolated mountain villages in Guangxi, China. We conducted epidemiological investigations in the affected communities and nucleotide sequence analyses of the cVDPV isolates. The results of the investigations showed that the AFP patient, an unimmunized 10-year-old boy, and five laboratory-confirmed contacts lived in the same village; one contact lived in a neighboring village. Only approximately 27% of children 5 to 10 years of age in the affected villages had received three or more doses of the trivalent oral poliovirus vaccine (OPV). Nucleotide sequence analyses revealed that the cVDPV isolates differed from the Sabin 1 (S1) isolate at 1.4 to 2.2% of VP1 nucleotide positions and shared 12 nucleotide substitutions within VP1. All isolates were S1/S2/S1/S3 recombinants sharing common recombination junctions. Key determinants of attenuation were replaced. Phylogenetic analysis suggested that the cVDPV circulated locally for approximately 12 months following the initiating OPV dose. No VDPVs were found after mass OPV immunizations, conducted from May to June 2006, that targeted all children <12 years of age. Our findings reinforce the point that VDPVs can emerge and spread in isolated communities with immunity gaps. Maintenance of sensitive AFP and poliovirus surveillance is essential to permit early detection and a rapid response to VDPV circulation.