Angus Council said in a statement on Thursday that the Scottish Environment Protection Agency (SEPA) has discovered the bacteria at Monifieth Beach.
It is currently unknown what has caused the contamination.
E. coli is a bacterial infection that can cause severe illness in people.
Symptoms range from mild loose stools to severe bloody diarrhoea. The most serious complications can lead to blood poisoning and kidney failure.
In dogs, E. coli infection can lead to blood poisoning, or septicemia, and has been found to compound with parvovirus in dogs and puppies, leading to an increased risk of death by parvovirus.
As a precautionary measure, SEPA has asked that people and their pets avoid bathing or paddling in the water near the beach until further notice.
A spokesperson for Sepa said: “Sepa are aware of an ongoing pollution incident potentially affecting the Monifieth bathing waters.
“Samples have been taken and the bathing water will continue to be closely monitored.
“Electronic bathing water signs have been updated to reflect any changes to the water quality.
“Sepa officers are investigating the situation and will explore any further mitigation measures that are required.”
The agency urged anyone who spots signs of a pollution incident to get in touch via SEPA’s Pollution Hotline 0800 80 70 60 or report it online.