This cross-sectional community household-based study aims to evaluate the water, sanitation, and hygiene facilities in the Gaza Strip and to investigate their associations with the occurrence of acute diarrhea among children under five years. A survey using a structured questionnaire was conducted on 1,857 households with an child under five years from August 2017 to June 2018. About 69.7% of heads of households reported a diarrheal episode among their children during the two months preceding the survey. Multivariable logistic regression showed that sewage water observed around the households was associated with an increased risk of acute diarrhea (AOR = 2.45; P < 0.001; 95% CI: 1.83–3.27). Nevertheless, the allocation of a special water tank for desalinated drinking water at home (AOR = 0.3; P = 0.02; 95% CI: 0.1–0.8), the connection of households to a closed sewerage system (AOR = 0.56; P < 0.001; 95% CI: 0.43–0.73), and handwashing practices before and after eating (AOR = 0.42; P = 0.003; 95% CI: 0.24–0.74 and AOR = 0.50; P = 0.03; 95% CI: 0.26–0.94, respectively), as well as using desalinated water sources for drinking purposes, were inversely associated with the incidence of acute diarrhea among children under five. Further improvements in the existing sewerage system and the intensification of sanitation and hygiene promotion programs at the household levels may reduce the risk of acute diarrhea among children under five years in the Gaza Strip.