A novel water quality intervention that consists of point-of-use water disinfection, safe storage and community education was field tested in Bolivia. A total of 127 households in two periurban communities were randomized into intervention and control groups, surveyed and the intervention was distributed. Monthly water quality testing and weekly diarrhoea surveillance were conducted. Over a 5-month period, intervention households had 44% fewer diarrhoea episodes than control households (P=0·002). Infants <1 year old (P=0·05) and children 5–14 years old (P=0·01) in intervention households had significantly less diarrhoea than control children. Campylobacter was less commonly isolated from intervention than control patients (P=0·02). Stored water in intervention households was less contaminated with Escherichia coli than stored water in control households (P<0·0001). Intervention households exhibited less E. coli contamination of stored water and less diarrhoea than control households. This promising new strategy may have broad applicability for waterborne disease prevention.