AIMS: To estimate the prevalence of trachoma in preschool children in Sarlahi district, Nepal, and to identify risk factors for the disease. METHODS: A stratified random sample of 40 wards was selected for participation in a trachoma survey. Within each ward, a systematic 20% sample of children 24-76 months of age was chosen to determine the presence and severity of trachoma using the World Health Organisation grading system. RESULTS: A total of 891 children were selected and 836 (93.8%) were examined for trachoma from December 1990 to March 1991. The prevalence of active trachoma was 23.6% (21.9% follicular and 1.7% intense inflammatory). Cicatricial trachoma was not seen in this age group. The prevalence of trachoma ranged from 0 to 50% across wards with certain communities at much higher risk for trachoma than others. Three year old children had the highest prevalence of follicular (25.5%) and intense inflammatory trachoma (4.3%). Males and females had similar prevalence rates. Wards without any tube wells were at higher risk than those with one or more tube wells. Lower rates of trachoma were seen in families who lived in cement houses, had fewer people per room, more servants, more household goods, animals, and land. Hence, less access to water, crowding and lower socioeconomic status were risk factors for trachoma. CONCLUSIONS: Although follicular trachoma is prevalent, intense inflammatory trachoma is relatively rare and scarring was not observed in this preschool population. Hence, this population may not be at high risk for repeat infections leading to blindness in adulthood.