The rapid population increase in Lima is leading to an expansion of unplanned informal settlements that lack a number of urban services including waste management, clean water and drainage systems. Using an urban ecosystem health approach, the study sought to identify the most relevant factors that affect child health related to water at the household level in two communities in eastern Lima. Workshops, semi-structured surveys, interviews and observations were used as mechanisms to promote health awareness, education and understanding. Weekly or bi-weekly diarrhea surveillance was performed. Excreta samples were collected to determine the presence of parasites in children. Water samples of open hand-dug wells were collected for fecal coliforms and human parasites analysis. Hand-dug wells, used by most people as domestic water, were found to be highly contaminated with fecal matter (99% of samples). Poor sanitary practices appear to be the main reason for nearly three quarters of children being infested with human protozoa. Through participatory decision-making, the communities identified improvements in domestic water quality using filters as their priority. Community members themselves were involved in building household slow-sand filters, encouraging hand washing by washtub installation, and closing the exposed wells to prevent external contamination. Education on health, environment and hygiene encouraged these behavioral changes. Slow-sand filters had a significant improvement on water quality, with a removal of up to 96.9% of fecal coliform contamination. Nevertheless, after medical treatment for protozoa removal, laboratory results showed protozoa re-infection in more than 60% of children. These results suggest the water is not the only way children become infected with human protozoa. However, 90%) of families perceived that the incidence of water borne disease, especially in children, had dropped remarkably since they used the filter. An analysis of interactions between the social conditions of poor shanty town dwellers, their access to and use of domestic water, and the disease burden of children in these communities identify the use of shallow wells as an important potential source of ill-heath. Breaking this cycle through the use of simple filtering technology has had positive effects on health, especially of children.