The study determined the prevalence of parasitic agents among under-five children with diarrhoea in Ibadan; evaluated the risk posed by different water sources, mode of household water treatment as well as disposal of faecal waste and tested the effects of parasites associated diarrhoea on the nutritional status of the children. A cross-sectional study that employed purposive sampling of Children with diarrhoea in three government hospitals in Ibadan. Three hundred children participated in the study. The participant were examined clinically and stool samples were collected for laboratory analysis.A structured questionnaire was filled for each child. Children with parasites in their stool were grouped as cases while those free from parasites were the controls. The cases and controls were compared for age, sex, nutritional status and the risk factors for parasites acquisition. Out of 300 under-five children studied, 22(7.3%) had parasites. There were 3(1.0%) protozoans and 19(6.3%) helminthes.The protozoans identified were Entamoeba histolytica 1(0.3%), Entamoeba coli 1(0.3%) and Trichomonas hominis 1(0.3%), while Ascaris lumbricoides 7(2.3%); Trichuris trichiura 2(0.7%) and hookworm 5(1.7%) were the helminthes identified. Differential rates of parasitic diarrhoea were observed in relation to the sources of household water with highest rates among children from household using river water (20.0%),followed by well(12.7%) and borehole(9.0%) while piped water(3.0%) had the lowest rate of parasitic diarrhoea. Children whose water was not treated before consumption had the rate of 12.8%, while those household that boil or filtered their water had 11.9% and 3.9% respectively. Percentage parasitic diarrhoea rate in relation to type of toilet facilities showed that the users of pit latrine had the highest rate (13.8%), followed by the users of bush (12.5%), while the use of open field and water closet had rates of 8.3% and 3.6% respectively. Out of the 22 children with parasitic diarrhoea 15/22 (68.2%) were undernourished, while 30/278(10.8%) of the parasite negative diarrhea were undernourished. This study has demonstrated that the prevalence of parasitic diarrhoea among under-five children in Ibadan is 7.3%. Children from households that sourced water from the river, failed to treat their water before consumption and used pit latrine are most likely to have parasitic diarrhoea. Malnutrition is a complication of parasites-associated diarrhoea in Ibadan.