Diarrhea remains a major cause of mortality in children under 5 years of age in Sub-Saharan countries in Africa. Risk factors for diarrhea vary by context and have important implications for developing appropriate strategies to reduce the burden of the disease. The objective of this study was to assess the prevalence of diarrhea and associated risk factors among children under 5 years of age in Kersa district, located in Eastern Ethiopia. A community-based crosssectional study was conducted among 1456 randomly selected households with at least one child under 5 years of age. A questionnaire and an observational check list were used for collecting information on socio-economic characteristics, environmental hygiene and behavioral practices, and occurrence of diarrhea among children under 5 years of age. Logistic regression was used to calculate the adjusted odds ratio of 95% confidence interval. The two-week prevalence of diarrhea among children under 5 years of age was 22.5% (95% CI: 20.3 -24.6). Improper refuse disposal practices (OR = 2.22, 95% CI: 1.20 -4.03), lack of hand washing facilities (OR = 1.92, 95%CI: 1.29 -2.86), living in rural area (OR = 1.81, 95% CI: 1.12 -3.31), the presence of two or more siblings in a household (OR = 1.74, 95% CI: 1.33 -2.28), and age of the child (OR= 2.25, 95% CI; 1.5-3.36) were the major risk factors for diarrhea. This study demonstrated that diarrhea morbidity was relatively high among children under 5 years of age residing in Eastern Ethiopia. Efforts to reduce childhood diarrhea should focus on improving household sanitation, personal hygiene, and child birth spacing.