One of the destroyed vessels, the US Liberty ship John Harvey, had been carrying a secret cargo of 2,000 M47A1 World War I type mustard gas bombs, each of which held 60-70 lb of sulfur mustard. The destruction of the John Harvey caused liquid sulfur mustard from the bombs to spill into waters already contaminated by oil from the other damaged vessels. The many sailors who had abandoned their ships for the safety of the water became covered with this oily mixture which provided an ideal solvent for the sulfur mustard. Some mustard evaporated and mingled with the clouds of smoke and flame. The casualties were pulled out of the water and sent to medical facilities which were completely unaware of what they carried with them. Medical personnel focused on personnel with blast or fire injuries. Little attention was given to those merely covered with oil. Many injuries caused by prolonged exposure to low concentrations of mustard might have been reduced by simple bathing or a change of clothes.
Within a day, the first symptoms of mustard poisoning had appeared in both casualties and medical personnel, 628 of them having become blind and started to develop chemical burns. This puzzling development was further complicated by the arrival of hundreds of Italian civilians also seeking treatment, who had been poisoned by a cloud of sulfur mustard vapor that had blown over the city when some of the John Harvey's cargo exploded. As the medical crisis worsened, little information was available about what was causing these symptoms, as the US military command wanted to keep the presence of chemical munitions secret from the Germans. Nearly all crewmen of John Harvey had been killed, and were unavailable to explain the cause of the "garlic-like" odor noted by rescue personnel.
Informed about the mysterious symptoms, Deputy Surgeon General Fred Blesse sent Lieutenant Colonel Stewart Francis Alexander. an expert in chemical warfare. Carefully tallying the locations of the victims at the time of the attack, Alexander traced the epicenter to the John Harvey, and confirmed mustard gas as the responsible agent when he located a fragment of the casing of a US M47A1 bomb.
By the end of the month, 83 of the 628 hospitalized military victims had died. The number of civilian casualties, thought to have been even greater, could not be accurately gauged since most had left the city to seek shelter with relatives.
A USN destroyer, the USS Bistera, had picked up survivors from the water during the raid and put out to sea; during the night nearly the entire crew went blind and many developed chemical burns. The destroyer managed to limp into Taranto harbour only with great difficulty.
 Cover up
At first the Allied High Command tried to conceal the disaster, in case the Germans believed that the Allies were preparing to use chemical weapons, which might provoke them into preemptive use. However, there were too many witnesses to keep the secret, and in February the US Chiefs of Staff issued a statement admitting to the accident and emphasising that the US had no intention of using chemical weapons except in the case of retaliation.
Dwight D. Eisenhower, the Allied Supreme Commander, approved Dr. Alexander's report. Winston Churchill, however, ordered all British documents to be purged, listing mustard gas deaths as "burns due to enemy action".
US records of the attack were declassified in 1959, but the episode remained obscure until 1967. In 1986 the British government finally admitted to survivors of the Bari raid that they had been exposed to poison gas and amended their pension payments accordingly.