This study examines the incidence of antibiotic-associated diarrhoea (AAD) in children in the community setting. Parents of 965 children aged 4–6 years and resident in rural/semi-rural South Australia completed a questionnaire on socio-demographic factors, and a 6-week daily diary detailing symptoms of gastroenteritis, antibiotic use, respiratory illness, and contact with someone with gastroenteritis. The incidence of AAD was 32·3%, falling to 23·5% when episodes associated with a respiratory illness were excluded. Respiratory illness in the previous 3 days (OR 6·76, 95% CI 4·87, 9·38), and contact with someone with gastroenteritis in the previous 14 days (OR 1·8, 95% CI 1·48, 2·19), were both associated with gastroenteritis. After adjusting for these, only the first day of antibiotic use was associated with gastroenteritis (OR 3·8, 95% CI 1·8, 8·06). Potential confounding factors, in particular inter-current respiratory illness, need to be considered when examining AAD.