Background: The prevalence of under nutrition is very high in developing countries especially in women and under five children. Stunting alone affected an estimated 154.8 million (22.9%) under five children globally in 2016. It is one of the main undernutrition and health problems facing children in Ethiopia. Hence, the aim of the current study was to assess the prevalence and associated factors of stunting among preschool children from food secure and food insecure households in Albuko district, northeast Ethiopia. Methods: This study was addressed by a community based comparative cross sectional study design which was conducted among preschool children in Albuko district from March to April 2017. Simple random sampling was used to select the five representative kebeles. To reach study participants, systematic sampling technique was utilized. Pretested and structured questionnaire was used to collect data. Height measurement was collected for each child. Anthropometric indicator, height-for-age was determined for children using current WHO growth standards. Adjusted odds ratio (AOR) with its 95 % confidence interval (CI) was computed to assess the strength of the association. To identify the associated factors of stunting, multivariable logistic regression models were built. In the multivariable analysis, variables with a P-value of <0.05 were considered statistically significant. Results: The overall combined prevalence of stunting among preschool children in the study area was 39. 3% [95%CI; 36.3, 42.3%]. A higher stunting prevalence was observed among preschool children from food insecure households [42.8%, 95%CI; 38.4,47.2%] than food secure ones [35.9%, 95%CI; 31.7, 40.1%]. Having uneducated mothers, large family size, and male sex were common factors significantly associated with stunting in both food secure and insecure households. While child birth order and the amount of water (<40 litters) for use were significantly associated with stunting among preschool children living in food secure households, and lesser child age, lack of extra food during pregnancy/lactation, and low dietary diversity score (DDS below four food groups) were significantly associated with stunting among preschool children from food insecure households.