Blackleg ( BL) is an acute to peracute highly fatal infectious disease of mainly large ruminants characterised by lesions of myonecrosis caused by Clostridium chauvoei, usually presenting as a sudden onset of sporadic mortalities. In Southeast Asia, ‘ BL’ is considered a cause of occasional outbreaks of a subacute febrile illness, although there are few published reports available. Investigation of a major outbreak of clinically diagnosed BL occurring in large ruminants (cattle and buffalo) in three neighbouring villages in central Laos in mid‐2017, was conducted to determine the financial impacts of BL on smallholder livelihoods. Owners of BL‐infected large ruminants in the three affected villages were interviewed ( n = 27) and financial losses including losses due to mortality, morbidity and costs of treatments, were determined. The reports of clinical signs of subcutaneous swelling with palpable crepitus in febrile animals were considered consistent with a diagnosis of BL. The outbreak occurred in 47 of a total 449 households with large ruminants across the three villages, affecting 147 of a total population of 3505 ‘at risk’ large ruminants with 71 deaths reported. At the household level, the mean morbidity and mortality rates were 5 ± 4(95% CI: 3–6) and 3 ± 2(95% CI: 1–4) heads per household, respectively. The estimated financial losses due to BL per affected household was USD 822 ± 692(95% CI: 518–1125), being 122% of their annual household income from large ruminant sales. The comparison between the estimated losses due to BL per village and cost of annual BL vaccination programmes, indicated a potential economic benefit of USD3.09 and USD12.37 for every dollar invested in the vaccination programme, if BL outbreaks occur every 20 and 5 years, respectively. This study indicates that clinically diagnosed BL can cause significant losses to smallholder households, and requires Lao animal health authorities to consider vaccination interventions to prevent losses from re‐emergence of BL in the known endemically affected areas.