The overall objective of this study is to promote the development of environmental health indicators in Mexico City. Specific examples focused on water quality, household characteristics e.g., sanitation and risk of enteric diseases. A geographic information system (GIS) was used in order to identify eligible wells and their surrounding homesteads (0.5 km around each well). A pilot study was conducted during the rainy season (1999), and a total of 1, 250 eligible households were visited on a random sample basis; only those having children under 5 years of age were interviewed. Data on diarrheal disease (i.e. occurrence in the previous two weeks) were obtained from 950 children, and their guardians provided information on their water supply, sanitation and socioeconomic variables. A total of 320 water samples were obtained from 40 wells, and tested for Total coliforms (TC/100 ml), Fecal coliforms (FC/100 ml). Escherichia coli (EC) and Fecal streptococci (FS). Bacterial indicators were detected in 40% of the wells in the western zone and in 32% of the southern zone (p = 0.01). The rate of diarrheal diseases was higher for children from the southern areas than in the west (OR = 1.7 and 95% CI: 0.99, 2.86). The final analysis showed a higher risk of diarrhea in children from rented homes than those living in owned dwellings (OR = 1.7 and 95% Cl: 1.04, 2.77): the risk was also highest for children living in houses with poor sanitation facilities (e.g., latrine) than those connected to a sewerage (OR = 1.7 and 95% Cl: 1.00, 2.93). Children from households perceiving unpleasant taste of water showed a higher risk than those without complaints (OR = 2.2 and 95% Cl: 1.28, 3.75). Linkages between environmental factors and health risk were created from spatially distributed information, and the proposed environmental health indicator (EHI) summarized the most significant predictors of diarrheal diseases. This baseline information may contribute to further environmental health investigation and policy making analysis.