The confirmed case, a woman in her 60s, had recently spent time in Griffith, central New South Wales.
She is the second confirmed case to have spent time in the Griffith region.
NSW Health confirmed the infected woman has been discharged from hospital and continues to recover at home.
The man, aged in his 70s was from the Griffith region.
Japanese encephalitis typically affects pigs and horses bitten by mosquitos carrying the infection, but was detected in animals and humans in Australia for the first time last month.
Symptoms of the disease in people can range from a fever and headache, neck stiffness and disorientation, to tremors, comas and seizures in severe infections.
Those with severe illness can experience permanent neurological disorders and may die from the disease.
"There is no specific treatment for JE, which can cause severe neurological illness with headache, convulsions and reduced consciousness in some cases," a statement from NSW Health read.
Less than one per cent of those infected will develop symptoms, with health authorities urging those who do to seek medical treatment.
Symptoms typically occur between five to 15 days after a bite from an infected mosquito.
With hot, humid conditions and the recent onslaught of wet weather in New South Wales and Queensland, authorities are concerned the disease will continue to spread.
"Several more people in NSW are currently undergoing further testing for JE and more cases are expected to be confirmed over the coming days and weeks," NSW Health said.
"The best thing people throughout the state can do to protect themselves and their families against JE is to take steps to avoid mosquito bites."
Residents are urged to take precautions to prevent mosquito bites, which include avoiding the outdoors at peak mosquito times, such as dawn and dusk and avoiding wetland and bushland areas.
Wearing long clothing, shoes and socks to protect skin as well as using mosquito repellent is also recommended.
"Apply repellent to all areas of exposed skin, especially those that contain DEET, picaridin, or oil of lemon eucalyptus which are the most effective against mosquitoes," NSW Health said.
Repellent can reduce the effectiveness of sunscreen, prompting warnings to reapply both products liberally, particularly after swimming or when exercising outdoors.
Residents are also urged to reduce areas of waters in their homes where mosquitos can breed.
"Mosquitoes only need a small amount of liquid to breed," NSW Health said.