We estimated the incidence of watery diarrhea in the community before and after introduction of the pentavalent rotavirus vaccine in Leó n, Nicaragua. A random sample of households was selected before and after rotavirus vaccine introduction. All children < 5 years of age in selected households were eligible for inclusion. Children were followed every 2 weeks for watery diarrhea episodes. The incidence rate was estimated as numbers of episodes per 100 child-years of exposure time. A mixed effects Poisson regression model was fit to compare incidence rates in the prevaccine and vaccine periods. The pre-vaccine cohort (N = 726) experienced 36 episodes per 100 child-years, and the vaccine cohort (N = 826) experienced 25 episodes per 100 child-years. The adjusted incidence rate ratio was 0.60 (95% confidence interval [CI] 0.40, 0.91) during the vaccine period versus the pre-vaccine period, indicating a lower incidence of watery diarrhea in the community during the vaccine period. Copyright © 2013 by The American Society of Tropical Medicine and Hygiene.