Two large oil containers have been dumped on the banks of the River Ely in Rhondda Cynon Taf.
The Environment Agency is appealing for information about the fly tipping which happened near Miskin over the weekend.
Around 200 gallons of oil leaked out but contractors managed to clear it up before it reached the watercourse which is a Site of Special Scientific Interest.
Officers said the leak could have had a major impact on the river.
"This fly-tipping could have had a major impact on the River Ely and the wildlife that lives there as well as posing a risk to human health," said Rhys Hughes from Environment Agency Wales.
"This kind of action is usually driven by people trying to profit from fly-tipping.
"Unfortunately it is the environment and the taxpayer that suffers as a result," he added.
The Environment Agency said anyone with information about the fly tipping is asked to call its incident hotline on 0800 80 70 60.