After 15 chickens were brought to a North Wales farm two weeks ago, birds began dying off, and specialists were called in.
Dr Christianne Glossop, Wales's chief veterinarian, told a news conference: "Wales and Great Britain contingency plans have been activated, and in line with these the farm has been placed under quarantine.
"A one-kilometer (0.6-mile) restriction zone has been placed around the affected premises... Within the zone, birds and bird products can't be moved. Bird gatherings may only take place under license."
Glossop said the virus discovered at the Welsh farm is H7N2, a low pathogenic strain of avian flu, not the deadly H5N1 strain that has been spreading in Southeast Asia over the past few years.
The H5N1 strain that has killed 185 people worldwide since 2003 was detected at a poultry plant in Suffolk, East Anglia, on February 3. Nearly 160,000 turkeys were culled following the discovery.