Diarrhea constitutes a major cause of morbidity and mortality in developing countries. Inappropriate drug prescribing is common in diarrhea, resulting in an increase in cost and adverse drug reactions. In Nepal, drug sellers often act as the first contact persons for the underprivileged. No information has been available regarding their knowledge, attitudes and practices (KAP) regarding diarrhea management. Using a structured questionnaire, between the 1st of January and the 31st of December 2003, 109 drug sellers in eastern Nepal were interviewed about their educational status, patient/attendant presentation at the outlet and their advice to patients/attendants. Only 2.7% of drug sellers were qualified in health education. Eighty percent of the patients/attendants sought advice from the drug sellers, only 20% presented to the outlet with prescriptions. The data reveals that about half of them were taking note of the nature of the diarrhea. Although 62 (56.8%) of them were aware of dehydration, only 2 (1.8%) of them knew all three signs of dehydration (dry tongue, non-elastic skin and sunken eyes). Sixty-six (60.5%) of them knew about oral rehydration solution (ORS), its principle and the required period of administration. About 50 to 60% of them were aware of the implications resulting from dehydration from uncontrolled diarrhea and of the importance of ORS in its management. Only 20% of the drug sellers advised ORS alone, otherwise it was dispensed along with drugs, such as antimotility agents (AMA) or metronidazole. As a result of the above findings, it is important to educate the drug sellers by conferring knowledge about the ethical aspects of drugs in the management of diarrhea.