Reliable epidemiologic data are essential for formulating effective policy to control rotavirus disease through immunization. The objective of this study was to describe the epidemiology of rotavirus diarrhea in a population-based cohort of children under 3 years of age residing in Abu Homos, Egypt, in 1995-1996. Rotavirus diarrhea incidence rates (episodes per person-year) were 0.13 for infants aged <6 months, 0.61 for those aged 6-11 months, 0.17 for those aged 12-23 months, and 0.15 for those aged 24-35 months. Fifty-six percent of children with rotavirus diarrhea had clinical dehydration; 90% of rotavirus diarrheal episodes occurred between July and November. In infants under 1 year of age, receipt of breast milk was associated with a lower incidence of rotavirus diarrhea. No other sociodemographic or environmental factor was found to be significantly associated with rotavirus diarrhea. Of 46 rotavirus isolates with strains identified, 41 (89%) were G serotypes 1 and 2. Rotavirus diarrhea was a major cause of morbidity in this cohort. Promotion of breastfeeding may exert a protective effect in young infants in this setting, but improvements in water and sanitation are unlikely to be effective preventive measures. The use of effective immunization against rotavirus in early infancy should be considered a public health priority.