Diarrhoea is a major cause of childhood morbidity and mortality globally. While the childhood diarrhoea and its association with child feeding, and hygiene, hand washing and water treatment are studied elsewhere, the association of water handling and child feeding with childhood diarrhoea is an understudied area in Nepal. This study aimed to investigate the association of water handling and child feeding practice with childhood diarrhoea among children of one to five years of age in Southern, Nepal. A cross-sectional study was conducted in the Dhanusha district of Southern Nepal in 2013. A total of 284 mother–child pairs were selected using systemic random sampling. A four-week prevalence of childhood diarrhoea was reported using frequency distribution. The association of childhood diarrhoea with water handling and child feeding practices was ascertained using multiple logistic regressions after adjusting for potential confounders. The result of the study demonstrated that the four-week prevalence of childhood diarrhoea was 36.6%. Our finding showed that unsafe water handling practices were associated independently with childhood diarrhoea: untreated water (aOR 3.55; 95% CI: 1.13–11.10), uncovered water (aOR 2.14; 95% CI: 1.09–4.19). Similarly, partial breast feeding (aOR 4.35; 95% CI: 1.87–10.12) was also associated with higher odds of childhood diarrhoea. One third of children in Southern Nepal still had diarrhoea within the four weeks preceding the survey. As poor water handling and sub optimal infant feeding practice were major risk factors contributing to such a high burden of the disease, health promotion strategies such as promotion of safe water handling, improved hygiene and child feeding practices are recommended for the prevention of childhood diarrhoea in Southern Terai of Nepal.