Caregivers often use paracetamol in the management of pediatric illnesses without a clear rationale. This study evaluated the perception and practices of caregivers regarding the use of paracetamol in children in Southwestern Saudi Arabia. This study involved a cross-sectional design involving 373 caregivers of children under twelve. The questionnaire elucidated the reasons, usage frequency, and safe usage practices. Data were analyzed using SPSS, applying Chi-square tests and logistic regression. Most caregivers were in the age range of 31-40 years, and with intermediate education. Paracetamol was mainly used for fever, generalized pain and, diarrhea, with fewer opting for other self-care measures. Caregivers with primary or less education were more likely to perceive paracetamol as safe (AOR = 2.98 (1.3-6.73), p = 0.009) and less inclined to check warning labels (AOR: 0.11 (0.05-0.25), p < 0.001) and expiry dates (AOR: 0.063 (0.027-0.14), p < 0.001). The caregiver's education level significantly influenced the determination of treatment duration (χ2 = 21.58 (4), p < 0.001), dosage (χ2 = 30.70 (4), p < 0.001), and frequency of administration (χ2 = 17.77 (4), p = 0.001). In conclusion, inadequate health literacy can result in a lack of attention towards crucial safety information about pediatric paracetamol use. Hence, counselling initiatives should be undertaken to ensure the safe and effective use of paracetamol in children.