A significant rural–urban disparity in unsafe child stool disposal practices exists in India, yet existing research falls short in identifying the contributing factors to this gap. This study addresses the research gap by contextualizing the rural–urban divide in unsafe child stool disposal using data from the fifth round of the National Family Health Survey (NFHS-5, 2019–21). In particular, the study examines the prevalence and predictors of unsafe disposal practices, exploring associated contributing factors to this gap. The study involves a sample of 78,074 women aged 15–49 with a living child under 2 years, without any missing data related to the study interest. Employing descriptive statistics, the Pearson chi-square test, multilevel logistic regression, and the Fairlie decomposition model, the research aims to fulfill its objectives. The rural–urban gap in unsafe child stool disposal practices among the study participants was 22.3 percentage points (pp), with a more pronounced gap among the Scheduled Tribes (ST). Notably, the gap was particularly wide in Madhya Pradesh (33.9 pp), Telangana (27.5 pp), Gujarat (26.1 pp), and Rajasthan (25.8 pp). Predictors such as mother’s education, mass media exposure, household wealth quintile, and sanitation facilities proved significant irrespective of residence. However, religion, social group, and water facility on household premises emerged as significant factors in rural areas only. The study identified that 67% of the explained gap in unsafe child stool disposal practices was attributed to the rural–urban difference in household wealth. Other noteworthy contributors were ‘household sanitation facility’ (21.3%), ‘mother’s education level’ (3.9%), and ‘water facility on household premises’ (3.9%). These findings underscore the need for population and area-specific policy interventions, especially for individuals from socio-economically disadvantaged backgrounds, those with lower education levels, and limited exposure to mass media, particularly in states with a high prevalence of unsafe disposal practices. Such interventions are crucial to mitigating the existing rural–urban gap in unsafe child stool disposal practices.