Background: The construction of latrine is a relatively simple technology that is used to prevent the spread of infectious diseases. While household access is important, community sanitation coverage is even more important to improve health through the regular use of well-maintained sanitation facilities. Objective: Assessing the impact of latrine utilization on diarrhoeal diseases in the rural community in the district of Hulet Ejju Enessie Woreda, East Gojam. Method: A community based descriptive cross-sectional study was conducted in a randomly selected 824 households that had 90% latrine coverage at the time data collection in 2006. A structured and pre-tested questionnaire complemented with observation was used to collect data. The study area is found in one of the districts of East Gojjam where the health services extension program was actively underway. Trained data collectors and supervisors were involved in the study. Data entry and cleaning was done using EPI INFO 6.04d, while SPSS version 11 was used for data analysis. Results: Most (61%) households with traditional pit latrines had latrine utilization. In a bivaraite analysis, the extent of latrine utilization was significantly associated with presence of primary or secondary school children in the house