Conventional methods for etiologic diagnoses of acute gastroenteritis (AGE) are time consuming and have low positive yield leading to limited clinical value. This study aimed to investigate quality improvements in patient management, antibiotic stewardship, and in-hospital infection transmission prevention using BioFire® FilmArray® Gastrointestinal Panel (GI Panel) in children with acute diarrhea. This was a prospective study recruiting children <19 years old with new onset diarrhea during the study period, and a matched historical cohort study of children diagnosed with AGE during the 4 years prior. Patients in the prospective cohort underwent stool testing with GI Panel and conventional methods. A total of 182 patients were included in the prospective cohort, of which 85.7% (n = 156) had community-onset and 14.3% (n = 26) had hospital-onset diarrhea. A higher pathogen positivity rate for community-onset diarrhea was observed by the GI Panel (58.3%, n = 91) compared to conventional studies (42.3%, n = 66) (p = 0.005) and historical cohort (31.4%, n = 49) (p < 0.001). The stool tests reporting time after admission was 25 (interquartile range, IQR 17–46) hours for the GI Panel, and 72 (IQR 48–96) hours for the historical cohort (p < 0.001). A significant reduction in antibiotic use was observed in the prospective cohort compared to historical cohort, 35.3% vs. 71.8%; p < 0.001), respectively. Compared to the GI Panel, norovirus ICT was only able to detect 4/11 (36.4%) patients with hospital-onset and 14/27 (51.8%) patients with community-onset diarrhea. The high positivity rate and rapid reporting time of the GI Panel had clinical benefits for children admitted for acute diarrhea, especially by reducing antibiotic use and enabling early adequate infection precaution and isolation.