Physical inactivity in childhood is a major public health issue. Dog ownership has been widely reported to lead to greater physical activity in adults and school-aged children. We examined if dog ownership and dog-facilitated physical activity were associated with higher physical activity in preschoolers. Secondary analysis of the ‘Play Spaces & Environments for Children's Physical Activity’ (PLAYCE, 2015–2018) study involving 1366, 2–5-year-olds from 122 long day-care centres in Perth, Australia was conducted. Socio-demographics and movement behaviours (physical activity, screen time, sleep) were examined by dog ownership, dog play and dog walking. Dog-owning preschoolers did physical activity 8 times/week more but 6 min/day less park play than non-dog owners (all p < 0.05). Dog-owning preschoolers who played with their dog ≥ 3 times/week did more physical activity, outdoor play and had 16 min/day more sleep (all p < 0.05). For dog-owners, family dog walking ≥ 3 times/week was positively associated with preschooler physical activity, outdoor play and negatively associated with screen time (all p < 0.05). Our findings suggest that the physical activity-related benefits from having a family dog may be realised when preschoolers spend time playing and walking their dog. Dog walking and play, not dog ownership alone, may be an important source of physical activity for preschoolers.