Unsafe drinking water remains a major contributor to childhood morbidity in developing regions. Over 18 months, we monitored 25 rural Bangladeshi villages to assess associations between household water quality indicators and incidence of diarrheal disease in children under five (n = 1,200). E. coli contamination was detected in 47% of samples, correlating strongly with diarrhea prevalence (RR = 2.8, 95% CI: 1.9–4.2). Villages using community-managed filtration systems reported 34% fewer cases. Results underscore the effectiveness of low-cost filtration and the importance of sustained public health infrastructure investment.