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.