In an attempt to prevent diarrhoea in a rural community in central Bolivia, an international non-governmental organization implemented a pilot project to improve drinking water quality using gravity-fed, household-based, ceramic water filters. We assessed the performance of the filters by conducting a five-month randomized controlled trial among all 60 households in the pilot community. Water filters eliminated thermotolerant (faecal) coliforms from almost all intervention households and significantly reduced turbidity, thereby improving water aesthetics. Most importantly, the filters were associated with a 45.3% reduction in prevalence of diarrhoea among the study population (p = 0.02). After adjustment for household clustering and repeated episodes in individuals and controlling for age and baseline diarrhoea, prevalence of diarrhoea among the intervention group was 51% lower than controls, though the protective effect was only borderline significant (OR 0.49, 95% CI: 0.24, 1.01; p = 0.05). A follow-up survey conducted approximately 9 months after deployment of the filters found 67% being used regularly, 13% being used intermittently, and 21% not in use. Water samples from all regularly used filters were free of thermotolerant coliforms.