Diarrhea is a recurring illness in childhood that is associated with malnutrition, stunted growth, and cognitive impairment. Children with diarrhea and other common childhood illnesses are frequently treated with antibiotics, often against recommendations. Antibiotic exposures early in life may increase susceptibility to infections and affect child growth through modifications of the gastrointestinal microbiota. We assessed the impact of antibiotic treatment on diarrheal risk and growth in a birth cohort from 2009 to 2013 of 497 children from semi-urban slums of Vellore, India. We estimated the effect of antibiotic treatment for diarrhea on the timing of a subsequent episode using inverse probability of exposure-weighted Kaplan-Meier curves. We also estimated the effect of any early life antibiotic exposure on rates of diarrhea using negative binomial regression. Based on these results, we used the parametric g-formula to model the impact of hypothetical interventions to prevent unnecessary antibiotic exposures. To assess the impact on growth, we estimated the effects of antibiotic exposures in the first 6 months on height and weight z-scores using longitudinal general linear regression. More than half of children were given at least one course of antibiotics in the first 6 months and more than half of these exposures were likely unnecessary. Antibiotic treatment of diarrhea was associated with reduced time to a subsequent episode, especially among younger infants. In addition, the adjusted relative incidence rate of diarrhea from 6 months to 3 years of age was higher among children who received any antibiotics before 6 months compared to those who did not, especially among children who were no longer exclusively breastfed by 6 months. We estimated that preventing unnecessary antibiotic exposures before 6 months could substantially reduce the incidence of diarrhea in early childhood. There were no associations between early antibiotic use and growth in the first 6 months and from 6 months to 3 years. Early life antibiotic exposure was associated with increased diarrheal risk, but had no association with growth. While antibiotics must be used for treatment when necessary, the potential for increased susceptibility to diarrhea should be considered when making treatment decisions.