Methicillin-resistant Staphylococcus aureus (MRSA) has been identified as a major cause of community-associated (CA) S. aureus infections in the past decade. The main reservoir in the community for MRSA and the factors contributing to its worldwide spread remain poorly defined. Between July 2005 and June 2008, a total of 6,057 healthy children 2 to 60 months of age were screened for carriage of S. aureus and Streptococcus pneumoniae in Taiwan. The prevalence and epidemiological factors influencing MRSA carriage were determined. MRSA strains were tested for antimicrobial susceptibility and underwent molecular characterization. The overall prevalences of MRSA and S. aureus carriage were 7.8% and 23.2%, respectively. A majority (88%) of MRSA isolates belonged to a common Asian-Pacific CA-MRSA lineage, multilocus sequence type 59, and were resistant to multiple non-beta-lactam antibiotics. The carriage rate of MRSA was higher among subjects 2 to 6 months old (P < 0.0001), residing in northern Taiwan (P = 0.0003), and enrolled later in the study (P < 0.0001). MRSA colonization was associated with the number of children in the family (adjusted odds ratio [aOR], 1.114; 95% confidence interval [CI], 1.002 to 1.240; P = 0.0463) and day care attendance (aOR, 1.530; 95% CI, 1.201 to 1.949; P = 0.0006). Breast feeding (P < 0.0001) and colonization with S. pneumoniae (P = 0.0170) were protective against MRSA colonization. We concluded that epidemic CA-MRSA strains increasingly colonized Taiwanese children between 2005 and 2008. The carriage rate varied significantly across different demographical features. Crowding was an independent environmental risk factor that might accelerate CA-MRSA transmission in the community.