While there are several empirical studies on agriculture-related environmental problems, such as soil degradation and wind and water erosion, only a few studies have dealt with environmental problems in the agricultural sector due to industrial pollution. The difference is that the first set of problems are intra-sectoral while the second is intersectoral. This paper attempts to study the environmental impact of water pollution on rural communities in general and on agricultural production, human health, and livestock in particular. Some important issues in this regard are (a) linkages between industrial development and changes in the micro (local) environment; (b) damage to crops and animal husbandry due to industrial pollution; and (c) impact on health and sanitation in rural communities. These issues are studied in detail with the help of primary data collected from a pollution-affected village in Andhra Pradesh.