This study investigates urban and rural fertility trends in Guatemala up to 2002. It also aims to establish, using the theory of diffusion as its theoretical framework, the extent to which ethnicity and ethnic diversity are associated with geographical patterns in local-level fertility after controlling for socio-economic indicators. Data from the Demographic and Health Surveys of 1987, 1995–96 and 1998–99, the National Maternal and Child Health Survey of 2002 and the Census of 2002 were used. P/F ratios were calculated and used as an analytical tool and quality control measure of the data in order to establish the timing of changes in fertility patterns as measured by age-specific fertility rates (ASFRs) based on exact exposure in four-year periods from 1972 to 2002. Finally, the 2002 census data were used to analyse and model fertility at the municipio-level using ordinary least squares regression. The results suggest a steady but very slow decline in fertility from 1972 until the mid-1990s. Both the P/F ratios and ASFRs calculated using the Maternal and Child Health Survey and Census of 2002 show a sharp decline in fertility since 1998. The regression results for the census data suggest an independent and significant effect of ‘proportion of indigenous people’ and an almost significant effect of ethnic diversity on fertility at the municipio-level. The very slow decline in fertility in Guatemala until fairly recently can be attributed to the fact that Guatemala has been lagging behind in terms of socio-economic development and the additional challenge of having a culturally very diverse and segregated population, preventing the spread of modern reproductive ideas and behaviour. The accelerated fertility decline since the end of the 1990s seems likely to be associated with the widespread availability and increased uptake of family planning following declining fertility desires among its indigenous population. Copyright © 2006 John Wiley & Sons, Ltd.