"The current hepatitis E epidemic is closely linked to a lack of water, hygiene infrastructure and sanitation," said MSF in a statement.
The site of attacks from the jihadist group Boko Haram since 2015, Diffa sits on the border with Nigeria and harbours at least 300,000 refugees and displaced people living alongside an already poor population, according to United Nations figures.
The UN has called on the international community to increase financing of aid to the region.
"Water and sanitary services clearly do not meet the needs of this population," said Elmounzer Ag Jiddou, who heads MSF's work in Niger.
MSF is focusing on early detection of the disease, treating people for free and running a campaign promoting hand washing in order to stem the epidemic.
Last week, Niger's health minister said the situation was under control while calling on anyone with symptoms of hepatitis E to visit a health centre immediately.
Pregnant women are especially vulnerable to the disease, which causes fever, headache, vomiting, abdominal pain and dark urine.
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