Piped water systems are considered to provide the highest service level for drinking water supplies; however, global monitoring of safe water access pays little attention to the type of water source that piped systems draw upon, even if the water is not treated prior to distribution. This study sought to understand whether the source of water for untreated piped supplies influences the prevalence of diarrhoea among children in rural Vanuatu. The analysis was based on a dataset integrating a Demographic and Health Survey and a nationwide water supply inventory. After adjusting for a range of potential confounders, the results revealed a significant association between diarrhoea and the type of water source supplying a piped system. Compared with borehole-supplied piped systems, spring-fed piped systems were significantly associated with increased odds of diarrhoea (adjusted odds ratio [AOR] 5.8, 95% confidence interval [CI] 1.1–31, p = 0.040). No significant association between diarrhoea and piped systems drawing on surface water was observed. Increased odds of diarrhoea were significantly associated with water supply systems constructed prior to the year 2000 (AOR 4.9, 95% CI 1.9–13, p = 0.001). The results highlight the need for improvements in spring protection as well as ongoing maintenance and periodic renewal of water supply infrastructure.