Background: Diarrhea is one of the leading causes of morbidity and mortality among under-five children nationally and globally. This study identified determinants of acute diarrheal disease among under-five children using hierarchical logistic regression. Objective: This study was conducted to identify determinants for hospitalization of children with acute diarrhea in Pawi Hospital, Benishangul Gumuz Region, Northwest Ethiopia, 2013/14. Methods: A hospital-based case-control study was performed on 148 cases and 442 controls. Data were collected using structured questionnaires. Both bivariate and hierarchical logistic multivariate analyses were carried out to identify the determinants of acute diarrheal. Results: Determinants for acute diarrheal disease were identified. Rural residence [AOR=6.8, 95%CI= (3.3, 14)], mothers having a low education [AOR=4.0, 95%CI= (1.5, 11.0)], living in a non-model households [AOR=2, 95%CI= (1.1, 4.0)] were from socioeconomic variables. Improper child stool disposal [AOR=2. 7, 95%CI= (1.5, 4.8)], not treating water at home [AOR=2. 5, 95%CI= (1.3, 4.6)] were among the environmental sanitation factors. Child`s age 6-11 moths [AOR=3.8, 95%CI= (1.7, 8.9)], bottle feeding [AOR=10, 95%CI= (4.6, 21.9)], being malnourished [AOR=2.3, 95% CI= (1.3, 3.91)], and maternal diarrhea [AOR=8. 8, 95%CI= (4.0, 19.0)] were determinants of acute diarrheal disease in under fives. Conclusions: Acute diarrhea is influenced by factors from all hierarchical levels. Therefore, Avoiding bottle feeding and interpersonal transmission, strengthening women's education, improving child nutrition; maximizing the health extension package model households and treating water at home are recommended with more emphasis on rural living children.