Aims:  The objective was to assess the impacts of repairing a failing onsite wastewater treatment system (OWTS, i.e., septic system) as related to coastal microbial water quality. Methods and Results:  Wastewater, groundwater and surface water were monitored for environmental parameters, faecal indicator bacteria (total coliforms, Escherichia coli, enterococci) and the viral tracer MS2 before and after repairing a failing OWTS. MS2 results using plaque enumeration and quantitative reverse transcriptase polymerase chain reaction (qRT‐PCR) often agreed, but inhibition limited the qRT‐PCR assay sensitivity. Prerepair, MS2 persisted in groundwater and was detected in the nearby creek; postrepair, it was not detected. In groundwater, total coliform concentrations were lower and E. coli was not detected, while enterococci concentrations were similar to prerepair levels. E. coli and enterococci surface water concentrations were elevated both before and after the repair. Conclusions:  Repairing the failing OWTS improved groundwater microbial water quality, although persistence of bacteria in surface water suggests that the OWTS was not the singular faecal contributor to adjacent coastal waters. A suite of tracers is needed to fully assess OWTS performance in treating microbial contaminants and related impacts on receiving waters. Molecular methods like qRT‐PCR have potential but require optimization. Significance and Impact of Study:  This is the first before and after study of a failing OWTS and provides guidance on selection of microbial tracers and methods.