Landfill has seeped orange sludge into the water off Houghton Bay, on Wellington's south coast on Wednesday afternoon.
The rain had caused leachate - a liquid produced by water draining or 'leaching' from landfills - to be discharged via the stormwater system, a spokesperson for Wellington Water told NZME.
Houghton Bay has long been plagued by the orange liquid which comes from an old landfill and smells of diesel.
"Wellington Water crews responded, investigated, and are now cleaning up," the spokesperson told NZME.
The Wellington City Council was approached for comment.
Rochelle Gilmoni, a Houghton Bay resident, told Newshub in January the leachate was "not pleasant".
"It can't be good for the environment," she said.
Ben Fountain of Wellington Water said it was an example of New Zealand's wasteful past catching up.
"In New Zealand, we've got a guilty secret, and that guilty secret is that we've been a wasteful people - our lack of population density has meant that we've got away with a lot of things," Fountain said in January.
