To determine the etiology of diarrhea among expatriate residents living in a developing country and identify risk factors for travelers' diarrhea that are difficult to evaluate in tourist populations. Clinic based case-control study. Primary care travel medicine clinic in Kathmandu, Nepal. A total of 69 expatriate residents with diarrhea, compared with 120 tourists with diarrhea, and 112 asymptomatic resident and tourist controls, selected systematically during a 1-year period. Risk factors for diarrhea assessed by questionnaire and pathogen prevalence assessed by microbiologic analysis of stool specimens. The dominant risk factors for diarrhea among expatriate residents included younger age (P = .003), shorter duration of stay in Nepal (P < .001), and eating out in restaurants (P = .01). Eating raw vegetables, salads, fresh fruit, or ice served in restaurants was not significantly associated with diarrhea. Longer duration of residence was linearly correlated with protection. Enteric pathogens were identified in 44 (64%) of 69 residents with diarrhea compared with 100 (83%) of 120 tourists with diarrhea, with enterotoxigenic Escherichia coli, Campylobacter, and Shigella predominant for both groups. Pathogens were also found in stools from 32 (37%) of 87 asymptomatic resident controls and 13 (52%) of 25 tourist controls. The attack rate of diarrhea among expatriates was estimated to be 49% (95% confidence interval, 37% to 61%) per month during the first 2 years of residence. The highest-risk months were April through July. Diarrhea among expatriates in a highly endemic environment is a persistent risk. The extremely high prevalence of enteric pathogens among asymptomatic persons reflects widespread exposure. The most important risk factors for travellers' diarrhea are difficult to modify, including younger age, duration of stay, eating in restaurants, and seasonality. Preventive dietary recommendations may not be fully protective, suggesting that pretravel advice should emphasize empiric treatment in addition to strategies to avoid exposure.