Background: Each year 2.5 billion cases of diarrheal disease are reported in children under 5, and on average every day more than 1,400 children die Objective: We explored associations between country characteristics and diarrheal disease in children under 5, adjusting by child, mother and household attributes in developing countries Methods: Multilevel analysis of data from the DHS survey and the World Bank which includes 348,706 children from 40 nations Results: prevalence of acute diarrhea was 14%. Country inequalities (OR=1.335; 95% CI 1.117-1.663) and country low income (OR= 1.488; 95% CI 1.024-2.163) were associated with diarrhea. Living in poor countries increases the association of household wealth and diarrhea (OR=1.0961; 95% CI 1.003-1.207) and no education of mother and diarrhea (OR=1.310; 95% CI 1.035-1.601), and living in unequal countries increases de association of no education of mother and diarrhea (OR=1.188; 95% CI 1.002-1.418). Other factors associated were female child (OR=0.922; 95% CI 0.900-0.944), age of child (OR=0.978; 95% CI 0.978-0.979), immunization (OR=0.821; 95% CI 0.799-0.843), normal birthweight (OR=0.879; 95% CI 0.834-0.926), maternal age (OR=0.987; 95% CI 0.985-0.989), lack of maternal education (OR=1.416; 95% CI 1.283-1.564), working mother (OR=1.136; 95% CI 1.106-1.167), planned pregnancy (OR=0.774; 95% CI 0.753-0.795), nuclear family (OR=0.949; 95% CI 0.923-0.975), and household wealth (OR=0.948; 95% CI 0.921-0.977). Conclusions: Inequalities and lack of resources at the country level in developing countries -but not health expenditure- were associated with acute diarrhea, independently of child, family and household features. Public health campaigns to target diarrhea should consider macro characteristics of the country.