The association between heavy rainfall and an increased risk of diarrhea has been well established but less is known about the effect of drought on diarrhea transmission. In 2011, the Pacific island nation of Tuvalu experienced a concurrent severe La Niña-associated drought and large diarrhea outbreak. We conducted a field investigation in Tuvalu to identify factors that contributed to epidemic transmission in the context of a drought emergency. Peak case numbers coincided with the nadir of recorded monthly rainfall, the lowest recorded since 1930. Independent factors associated with increased risk of diarrhea were households with water tank levels below 20% (odds ratio [OR] = 2.31; 95% confidence interval = 1.16-4.60) and decreased handwashing frequency (OR = 3.00 [1.48-6.08]). The resolution of the outbreak occurred after implementation of a hygiene promotion campaign, despite persistent drought and limited water access. These findings are potentially important given projections that future climate change will cause more frequent and severe droughts.