We report the influenza activity in New Zealand in 2005 (including an influenza B epidemic) in terms of the disease burden, hospitalisations, viral strain characterisations, and vaccine recommendations. The national influenza surveillance system includes sentinel general practice surveillance, laboratory-based surveillance, and hospital admission and mortality surveillance. The results obtained in 2005 were analysed. During the 2005 winter season, 3929 consultations for influenza-like illness (ILI) were reported from a national sentinel network of 87 general practices. It is estimated that ILI resulting in a visit to a general practitioner affected over 47,108 New Zealanders or about 1.3% of total population. Influenza hospitalisations and viral isolations reached the second highest level in the 15 years from 1990 to 2005. Influenza morbidity (as measured by age specific rates of hospitalisations) was high in children aged 0-19 years. In particular, the burden of influenza in children aged 5-19 years in 2005 was higher than previous years from 1995-2004 as measured by the excess morbidity rate and viral isolations. The ILI consultation rates varied greatly among health districts with the highest rates being reported from the Eastern Bay of Plenty and Otago Health Districts. The influenza activity peaked in the mid of June to July with influenza B activity preceding influenza A activity. This influenza B activity was the highest level recorded over the last 15 years. Influenza B/HongKong/330/2001-like virus was the predominant strain. Significant antigenic drift was observed among the A/Wellington/1/2004 (H3N2)-like viruses and B/HongKong/330/2001-like viruses--resulting in an updated seasonal vaccine strain for 2006. The influenza surveillance in 2005 recorded the highest influenza B activity over the last 15 years with co-circulation of influenza B (Hong Kong) and B (Shanghai) strains in an epidemic. The peak of influenza B activity preceded the peak of influenza A activity with significant antigenic drift among the A/Wellington/1/2004 (H3N2)-like viruses and B/HongKong/330/2001-like viruses. Significant excess morbidity was observed in the 5 to 19 year age group in a highly variable geographical distribution across New Zealand. This confirms the value of the national influenza surveillance system as an essential public health component for monitoring the incidence and distribution of influenza and predominant strains in New Zealand.