To explore the genetic components of susceptibility to early childhood diarrhea (ECD), we used a quantitative genetic approach to estimate the heritability of ECD among children from two Brazilian favelas. Shared environment was used to model common exposure to environmental factors. Genetic relatedness was determined from pedigree information collected by screening household participants (n = 3,267) from two geographically related favelas located in Fortaleza, Brazil. There were 277 children within these pedigrees for whom diarrheal episodes in the first two years of life were recorded. Data on environmental exposure and pedigree relationship were combined to quantitatively partition phenotypic variance in ECD into environmental and genetic components by using a variance components approach as implemented in Sequential Oligogenic Linkage Analysis Routines program. Heritability accounted for 54% of variance in ECD and proximity of residence effect accounted for 21% (P < 0.0001). These findings suggest a substantial genetic component to ECD susceptibility and the potential importance of future genetics studies.