Nitrofurantoin is a broad-spectrum first-line antimicrobial used for managing uncomplicated urinary tract infection (UTI). Loss-of-function mutations in chromosomal genes nfsA, nfsB and ribE of Escherichia coli are known to reduce nitrofurantoin susceptibility. Here, we report the discovery of nitrofurantoin heteroresistance in E. coli clinical isolates and a novel genetic mechanism associated with this phenomenon. Subpopulations with lower nitrofurantoin susceptibility than major populations (hereafter, nitrofurantoin-resistant subpopulations) in two E. coli blood isolates (previously whole-genome sequenced) were identified using population analysis profiling. Each isolate was known to have a loss-of-function mutation in nfsA. From each isolate, four nitrofurantoin-resistant isolates were derived at a nitrofurantoin concentration of 32 mg l-1, and a comparator isolate was obtained without any nitrofurantoin exposure. Genomes of derived isolates were sequenced on Illumina and Nanopore MinION systems. Genetic variation between isolates was determined based on genome assemblies and read mapping. Nitrofurantoin minimum inhibitory concentrations (MICs) of both blood isolates were 64 mg l-1, with MICs of major nitrofurantoin-susceptible populations varying from 4 to 8 mg l-1. Two to 99 c.f.u. per million demonstrated growth at the nitrofurantoin concentration of 32 mg l-1, which is distinct from that of a homogeneously susceptible or resistant isolate. Derived nitrofurantoin-resistant isolates had 11-66 kb deletions in chromosomal regions harbouring nfsB, and all deletions were immediately adjacent to IS1-family insertion sequences. Our findings demonstrate that the IS1-associated large-scale genetic deletion is a hitherto unrecognized mechanism of nitrofurantoin heteroresistance and could compromise UTI management. Further, frequencies of resistant subpopulations from nitrofurantoin-heteroresistant isolates may challenge conventional nitrofurantoin susceptibility testing in clinical settings.