The Dutch Government has banned all exports of live sheep, cattle and goats after a farm tested positive for the harmful bluetongue virus.
Officials have imposed restrictions around the farm in Kerkrade
Officials have also introduced movement restrictions covering a 170km radius around the affected farm in Kerkrade.
It is the first time the insect-borne virus, which is normally found in Mediterranean regions, has been discovered in northern Europe.
Health experts said the viral infection did not pose a risk to human health.
All species of ruminants, which include goats and deer as well as cattle, can be infected. Sheep are the most susceptible, with up to 70% of an infected flock dying from the virus.
Visible characteristics of the disease in sheep include a fever that may last for several days, mucous lining the animal's mouth, nose and eyes, and excessive salivation and frothing.
"We had a report at the beginning of this week that there could possibly be bluetongue in the south of Holland at a farm with sheep," a spokeswoman for the Dutch Agriculture Ministry told the BBC.
"Our veterinarians were very surprised by this because it is a disease that is known to occur in southern Europe but not in the north."
Following a number of tests in laboratories in the Netherlands and the UK, scientists confirmed the sample had tested positive.
"We have one farm with sheep that have bluetongue, and there are 10 farms with suspected cases of the disease," the spokeswoman said.
The Dutch government introduced an immediate ban on live exports of sheep, cattle and goats and "living products" including sperm, cells and embryos.
A number of other measures have also been put in place.
Transportation of animals has been banned in a 20km (12-mile) radius around the affected farm, and farmers are being told to keep their animals indoors and to spray insecticides on their land.
There are also restrictions on the movement of animals that can be infected beyond a wider 170km (105-mile) exclusion zone. Farmers in this area are also being told to spray insecticides.
The species of midges that are known to spread the virus are normally found in warmer parts of Europe, such as the Mediterranean region.
The insects prefer to feed on large animals, such as cattle. However, when there are no cattle in the area or if the midge population is high then sheep are targeted.
The spokeswoman for the Dutch Agriculture Ministry said officials were investigating how the virus was able to travel so far north.
"The midges that transmit the virus have not been found in Holland, but we have found two other species that can carry the virus - these are local midges that are accustomed to colder weather.
"As for how the virus itself got here, we have not got a clue at this stage," she said. "We have flown in experts from the EU to help us find out the answer to this question."
Some scientists believe that climate change could be behind the northward spread of the virus. The warming temperatures have seen the midges gradually move into higher latitudes.
A spokesman for the UK's Department for Environment, Food and Rural Affairs (Defra) said officials were monitoring developments in the Netherlands.
He said that the department would issue advice to UK farmers if it was necessary, but no action was needed at this stage.
The spokesman added that consumers should not be alarmed because the bluetongue virus posed no risk to human health.