Hydrogen sulfide
Water containing hydrogen sulfide usually does not pose a health risk, but does give water a nuisance "rotten egg" smell and taste. Water supplies with as little as 1.0 ppm (part per million) hydrogen sulfide are corrosive, may tarnish copper and silverware, and occasionally release a black material that stains laundry and porcelain.
Sulfur bacteria
Hydrogen sulfide is formed by sulfur bacteria that may occur naturally in water. These bacteria use the sulfur in decaying plants, rocks, or soil as their food or energy source and as a by-product produce hydrogen sulfide. The sulfur bacteria do not cause disease, but their presence in water can cause a bad taste or odor.
Water heater cause of "rotten egg" smell
Water heaters can also be sources of foul odors stemming from hydrogen sulfide. A magnesium rod is often placed in the tank by the manufacturer to prevent water heater corrosion. Sulfur that is dissolved in water can react with the magnesium rod forming hydrogen sulfide. The magnesium rod can be replaced with an aluminum one or removed completely. Removal however, may void the company's warranty.