Around 300 high school students attended a massive festival near the Texas town of Lakeway on June 20.
Multiple teenagers have since tested positive for Covid-19.
The town’s Mayor Sandy Cox has warned the mass “pong fest” gathering will lead to a local spike of cases in a state already hit with record hospitalisations.
“Unfortunately, our caseload is probably going to increase, and it’s because there was a very large party this past Saturday,” she said in a Facebook video.
The party took place at an unspecified location in Travis County, according to a news release.
Austin Public Health is investigating.
Everyone who attended the party has been ordered to self-quarantine for the next two weeks.
Anyone who came into contact with a party-goer must also isolate for 14 days.
Cox told CNN it was still unclear whether the party had led to a high number of cases in the area.
“The city is trying to get a handle on who attended, and the numbers are so big, contact tracing everyone is not possible,” the mayor said, according to Community Impact Newspaper.
“Hopefully we can contain this. The worst thing that can happen is that we don’t contain this.”
Lakeway has seen 105 cases, 50 of which are currently active, she added.
Shelly Parks, a spokeswoman for Austin Homeland Security & Emergency Management, told CNN officials learned about the exposure because health workers are “asking that participation in gatherings be mentioned for contact training purposes when people are getting tested”.
Texas has seen the fourth-highest number of cases in the US, with more than 177,000 testing positive for coronavirus.
Breaking the lockdown has led to a number of localised outbreaks in the US.
This week in Gainesville, Florida, three students tested positive for coronavirus after sharing a TikTok video of a boozy night out.
University of Florida graduate Lauren Bouskila posted the video of herself and two roommates drinking at a bar with no masks or social distancing.
In the since-deleted video, she claimed they had gone out because Gainesville had “barely any cases”.
But she later shared pictures of herself being tested for Covid-19 as she confirmed the three had been infected.