Background Diarrhea remains the 2nd leading cause of death among children under 5 globally. It kills more young children than AIDS. It would have been prevented by simple home management using oral rehydration therapy. Mothers play a central role in its management and prevention. So, the main objective of this study was to assess mothers’ knowledge, attitude & practice in prevention & home-based management of diarrheal disease among under-five children in Dire Dawa, Eastern Ethiopia. Methods Institutional based cross-sectional study was conducted from March 15–April 14, 2016, in Diredawa among 295 Mothers who had under-five child with diarrhea in the last 2 weeks using simple random sampling method. Mothers were interviewed face to face by using pretested, standard and structured questionnaire. The data quality was assured by translation, retranslation and pretesting the questionnaire. Data were checked for completeness, consistency and then entered into Epi Info v3.1 and analyzed using SPSS v20. The descriptive statistical analysis was used to compute frequency, percentages, and mean of the findings of this study. The results were presented using tables, charts, and graphs. Results In this study, 295 participants were included with 100% response rate. From total 295 mothers, around two-thirds (65.2%) of them had good knowledge, but more than half of mothers (54.9%) had a negative attitude towards home-based management and prevention of diarrhea among under-five children. Regarding the attitude of the mothers, 58% had poor practice towards home-based management and prevention of diarrhea among under-five children. Conclusion The finding of this study showed that the attitude and practice of mothers were unsatisfactory about the prevention and home-based management of under-five diarrheal diseases. Therefore, Health education, dissemination of information, and community conversation should plan and implement to create a positive attitude and practice towards the better prevention and management of under 5 diarrheal diseases. Electronic supplementary material The online version of this article (10.1186/s12887-018-1321-6) contains supplementary material, which is available to authorized users.