BACKGROUND Globally, diarrhoea is the second leading cause of death in children under five and a major public health problem. Despite several health care initiatives taken by the government, a large proportion of children still experience diarrhoeal diseases which cause high childhood death in India. This study aims to examine the socio-demographic and environmental factors associated with diarrhoea in children under five in India. METHODS A cross-sectional study was designed using secondary data from the recent round of the National Family Health Survey (NFHS-4), conducted in 2015-16. A total of 247,743 living children below 5 years of age were included in the analysis. Bivariate and multivariate logistic regression models were carried out to assess the factors associated with childhood diarrhoeal disease. RESULTS In India, about 9% of under-five children experience diarrhoeal disease in the past 2 weeks preceding the survey. Children living in rural areas (Adjusted odds ratio [aOR]: 1.05; 95% CI: 1.01, 1.09), children belonged to scheduled tribe (aOR: 0.83; 95% CI: 0.79, 0.89) and other castes (aOR: 0.92; 95% CI: 0.88, 0.97), Muslim children (aOR: 1.18; 95% CI: 1.13, 1.24), and children resided in the central (aOR: 1.61; 95% CI: 1.52, 1.70) and west (aOR: 1.08; 95% CI: 1.01, 1.15) regions were significantly associated with higher likelihood of diarrhoea in the past 2 weeks. Concerning environmental factors, child stool disposal (aOR: 1.06; 95% CI: 0.98, 1.09), floor materials (aOR: 1.08; 95% CI: 1.03, 1.12) and roof materials (aOR: 1.08; 95% CI: 1.04, 1.13) of the household were found to be significant predictors of childhood diarrhoea occurrence. CONCLUSIONS Diarrhoeal disease is common among children who lived in rural areas, scheduled castes, Muslims, and children from poor families. Regarding environmental factors, stool disposal practices in the household, dirt floor, and thatch roof materials of the household unit are risk factors for diarrhoeal disease. Targeted approach should be initiated to mitigate the problem of the poor health status of children by providing adequate health care. The policy-makers and stakeholders should address adverse environmental conditions by the provision of latrine and improved housing facilities.