Persistent diarrhea (PD; duration ⩾14 days) is a growing part of the global burden of diarrheal diseases. A 45-month prospective cohort study (with illness, nutritional, and microbiologic surveillance) was conducted in a shantytown in northeastern Brazil, to elucidate the epidemiology, nutritional impact, and causes of PD in early childhood (0–3 years of age). A nested case-control design was used to examine children's diarrhea burden and nutritional status before and after a first PD illness. PD illnesses accounted for 8% of episodes and 34% of days of diarrhea. First PD illnesses were preceded by a doubling of acute diarrhea burdens, were followed by further 2.6–3.5-fold increased diarrhea burdens for 18 months, and were associated with acute weight shortfalls. Exclusively breast-fed children had 8-fold lower diarrhea rates than did weaned children. PD-associated etiologic agents included Cryptosporidium, Giardia, enteric adenoviruses, and enterotoxigenic Escherichia coli. PD signals growth shortfalls and increased diarrhea burdens; children with PD merit extended support, and the illness warrants further study to elucidate its prevention, treatment, and impact.