Objectives: To improve our understanding of climate variability and diarrheal disease at the community level and inform predictions for future climate change scenarios, we examined whether the El Niño climate pattern is associated with increased rates of diarrhea among Peruvian children. Methods. We analyzed daily surveillance data for 367 children aged 0 to 12 years from 2 cohorts in a peri-urban shantytown in Lima, Peru, 1995 through 1998. We stratified diarrheal incidence by 6-month age categories, season, and El Niño, and modeled between-subject heterogeneity with random effects Poisson models. Results. Spring diarrheal incidence increased by 55% during El Niño compared with before El Niño. This increase was most acute among children older than 60 months, for whom the risk of a diarrheal episode during the El Niño spring was nearly 100% greater (relative risk = 1.96; 95% confidence interval = 1.24, 3.09). Conclusions. El Niño-associated climate variability affects community rates of diarrhea, particularly during the cooler seasons and among older children. Public health officials should develop preventive strategies for future El Niño episodes to mitigate the increased risk of diarrheal disease in vulnerable communities.