Simple, effective and affordable methods are needed to treat and safely store non-piped, gathered household water. This study evaluated point-of-use chlorination and storage in special plastic containers of gathered household water for improving microbial quality and reducing diarrhoeal illness of consumers living under conditions of poor sanitation and hygiene. Community families were recruited and randomly divided into intervention (household water chlorination and storage in a special container) and control (no intervention) households. Microbes in stored household water were extensively inactivated by 1-5-mg/L doses of hypochlorite. Escherichia coli levels in stored household waters were < 1/100 mL in most intervention households but readily detectable at high levels in control households. Stored water of intervention households was also lower in Clostridium perfringens and heterotrophic plate count bacteria than in control households. The intervention reduced household diarrhoeal illness. In Bolivia, monthly episodes of household diarrhoeal illness were 1.25 and 2.2 in intervention and control families, respectively (P = < 0.002) indicating that 43% of community diarrhoea was preventable by using the intervention. In Bangladesh, mean episodes of child diarrhoea/1,000 d were 19.6 and 24.8 in intervention and control groups respectively (P = < 0.03) indicating that about 24% of observed diarrhoea was preventable by using the intervention. Chlorine disinfection and storage in an appropriate container significantly improved the microbiological quality of non-piped household drinking water and reduced community diarrhoeal disease. Widespread use of this simple treatment and storage system for non-piped domestic water has the potential to dramatically reduce the global burden of waterborne diarrhoeal disease.