Twenty-three households in the Bishop's Peak Elementary School neighborhood and the school were issued a precautionary boil water notice on Thursday, according to the City of San Luis Obispo.
City officials say there was a waterline break and loss of system pressure in the area.
They are awaiting water quality lab results that confirm the water is safe to drink before lifting the boil water notice.
The notice only applies to water used for drinking and cooking purposes.
In the meantime, city officials say bottled water was delivered to the affected homes and residents can also get free bottled water at the elementary school.
The city expects the issue to be resolved within 48 hours. Affected residents will be notified when the notice is lifted.