Who cut the cheese?

New Jersey, apparently.

Across the length and breadth of Manhattan, people were asking, "What's that smell?" after a pungent odor like natural gas or rotten eggs blanketed the borough and northern New Jersey for three hours yesterday morning.

By evening, the answer seemed to be a stinky gas emitted by a New Jersey swamp or marsh.

"That's where our noses and instruments tell us" the smell was coming from, said Charles Sturcken, a spokesman for the city Department of Environmental Protection.

The theory is within "the realm of possibility," said Stephen Jones, a spokesman for the New Jersey office of Emergency Management.

The odor, which sparked fears of terrorism, had people jamming 911 and Con Ed lines from Battery Park to Inwood from river to river.

"It was really, really bad, so bad it gave me a headache," said Kate Browne, who lives in the West Village.

Alfred Stewart, 47, who lives in Chelsea, agreed.

"That smell was stinking. It smelled, like, toxic," he said. "If you stayed in it and held it enough, you probably would have gotten dizzy from it."

The odor disrupted mass transit during rush hour and forced brief evacuations of Macy's in Herald Square, several area schools and some Midtown skyscrapers.

The FDNY responded to 409 calls about the odor - with many residents fearing they had a gas leak.

Twelve people in the city were taken to hospitals complaining of breathing problems, as were seven people in northern New Jersey.

People milled about outside evacuated buildings, asking: What is rotten in the City of New York? The answer seemed to be mercaptan, a gas that contains sulfur compounds and is added to natural gas so leaks can be identified.