The world is not on track to achieve universal access to safely managed water by 2030, and access is substantially lower in rural areas. This Sustainable Development Goal target and many other global indicators rely on the classification of improved water sources for monitoring access. We aimed to investigate contamination in drinking water sources, comparing improved and unimproved sources in urban and rural settings. We used data from Multiple Indicator Cluster Surveys, which tested samples from the household water source and a glass of water for Escherichia coli contamination across 38 countries. Contamination was widespread and alarmingly high in almost all countries, settings, and water sources, with substantial inequalities between and within countries. Water contamination was found in 51.7% of households at the source and 70.8% in the glass of water. Some improved sources (e.g., protected wells and rainwater) were as likely to be contaminated as unimproved sources. Some sources, like piped water, were considerably more likely to be contaminated in rural than urban areas, while no difference was observed for others. Monitoring water contamination along with further investigation in water collection, storage, and source classification is essential and must be expanded to achieve universal access to safely managed water.