In Uganda, water-borne diseases, especially diarrhoea still remain a big challenge to attainment of water related Millennium Development Goals. Compared to adults, children below the age of 6 years face a higher burden of diarrhoea, with the incidence estimated at 51 per 1000. Uganda has earmarked large amounts of resources for water related interventions but still the current levels of spending are inadequate to ensure that everyone gets access to improved drinkingwater. Given that funding is limited, policy makers in the water sector are concerned with how best to allocate scarce resources. To address part of this concern, this paper analysed the cost effectiveness of public stand-posts and boreholes in reducing the burden of diarrhoea among infants. The analysis involved computation of the Disability Adjusted Life Years (DALY) and public and social costs per DALY. Findings revealed that the average public cost per DALY is remarkably lower for public stand-posts than for boreholes. Additionally, the net social cost per DALY is lower for public stand-posts than for boreholes. The implication is that public stand-posts are more cost effective than boreholes in reducing the burden of diarrhoea. However, given the currently limited level of funding to the water sector, expanding coverage of public stand-posts would require external budget assistance.