Progress toward the sanitation component of Millennium Development Goal (MDG) Target 7c was reassessed to account for the need to protect communities and the wider population from exposure to human excreta. We classified connections to sewerage as "improved sanitation" only if the sewage was treated before discharge to the environment. Sewerage connection data was available for 167 countries in 2010; of these, 77 had published data on sewage treatment prevalence. We developed an empirical model to estimate sewage treatment prevalence for 47 additional countries. We estimate that in 2010, 40% of the global population (2.8 billion people) used improved sanitation, as opposed to the estimate of 62% (4.3 billion people) from the WHO/UNICEF Joint Monitoring Programme (JMP), and that 4.1 billion people lacked access to an improved sanitation facility. Redefining sewerage-without-treatment as "unimproved sanitation" in MDG monitoring would raise the 1990 baseline population using unimproved sanitation from 53% to 64% and the corresponding 2015 target from 27% to 32%. At the current rate of progress, we estimate a shortfall of 28 percentage points (1.9 billion people) in 2010 and a projected 27 percentage point shortfall in 2015.