Water and sanitation services are fundamental to the prevention of pediatric diarrhea. To enhance both access to water and investment, some argue for the privatization of municipal water networks. Water networks in multiple Bolivian cities were privatized in the 1990s, but contracts ended following popular protests citing poor access. A population-based retrospective cohort study was conducted in two Bolivian cities. Data were collected on family water utilization and sanitation practices and on the prevalence of diarrhea among 596 children. Drinking from an outdoor water source (OR, 2.08; 95%CI, 1.25-3.44) and shorter in-home water boiling times (OR, 1.99; 95%CI, 1.19-3.34) were associated with prevalence of diarrhea. Increased prevalence was also observed for children from families using private versus public water services, using off-network water from cistern trucks, or not treating their water in-home. Results suggest that water source, water provider, and in-home water treatment are important predictors of pediatric diarrhea.