Objective The aim of this study was to estimate the direct medical cost per episode and the annual cost for acute diarrhea (AD) in children under five years of age in Ambulatory Care Centers of the Ministry of Public Health (MOPH) of Ecuador. Methods A cost of illness study with a provider perspective was carried out through a micro-costing of health resources and valuated in international dollars. Medical consultations and laboratory tests were valued using the tariff framework of services for the National Health System and for the prescribed medications, a reported cost registry of pharmacy purchases made in the year of study was used. Results A total of 332 electronic health records of children under five years of age were included in the analysis. Laboratory tests were performed on 37.95% (126/332), medications were prescribed to 93.67% (311/332) of the children, and antimicrobials were prescribed to 37.35% (124/332) of the children, representing an antibiotic prescription rate of 26.51% (88/332) and an antiparasitic prescription rate of 10.84% (36/332). The mean cost of the MOPH per child per episode of AD was US$45.24 (2019 dollars) (95% CI:43.71 to 46.76). Conclusion The total estimated cost of AD in children under five years of age for the MOPH in 2019 was about US$6,645,167.88 million (2019 dollars) (95% CI: 6,420,430.77 to 6,868,436.12). A high proportion of the direct medical cost of AD in children under five years of age in outpatient settings is due to unnecessary laboratory tests.