: Extended-spectrum beta-lactamase-producing Enterobacteriaceae (ESBL), a family of bacteria that includes Escherichia coli, have emerged as a global health threat. This study examined risks associated with carriage of third-generation cephalosporin-resistant (3GC-R) E. coli, including ESBL-producing, multidrug-resistant, and extensively drug-resistant (XDR) strains in children living in semirural parishes of Quito, Ecuador. We conducted a longitudinal study with two cycles of sampling (N = 374, N = 366) that included an analysis of child fecal samples and survey questions relating to water, sanitation, and hygiene, socioeconomic status, household crowding, and animal ownership. We used multivariate regression models to assess risk factors associated with a child being colonized. Across the two cycles, 18.4% (n = 516) of the 3GC-R isolates were ESBL-producing E. coli, and 40.3% (n = 516) were XDR E. coli. Children living in households that owned between 11 and 20 backyard animals had an increased odds of being colonized with XDR E. coli (odds ratio [OR] = 1.94, 95% confidence interval [CI]: 1.05–3.60) compared with those with no animals. Households that reported smelling odors from commercial poultry had increased odds of having a child positive for XDR E. coli (OR = 1.72, 95% CI: 1.11–2.66). Our results suggest that colonization of children with antimicrobial-resistant E. coli is influenced by exposure to backyard and commercial livestock and poultry. Future studies should consider community-level risk factors because child exposures to drug-resistant bacteria are likely influenced by neighborhood and regional risk factors.