Existing methodologies to record diarrheal disease incidence in households have limitations due to a high-episode recall error outside a 48-hour window. Our objective was to use mobile phones for reporting diarrheal episodes in households to provide real-time incidence data with minimum resource consumption and low recall error. From June 2014 to June 2015, we enrolled 417 low-income households in Dhaka, Bangladesh, and asked them to report diarrheal episodes to a call center. A team of data collectors then visited persons reporting the episode to collect data. In addition, each month, the team conducted in-home surveys on diarrhea incidence for a preceding 48-hour period. The mobile phone surveillance reported an incidence of 0.16 cases per person-year (95% CI: 0.13–0.19), with 117 reported diarrhea cases, and the routine in-home survey detected an incidence of 0.33 cases per person-year (95% CI: 0.18–0.60), the incidence rate ratio was 2.11 (95% CI: 1.08–3.78). During focus group discussions, participants reported a lack in motivation to report diarrhea by phone because of the absence of provision of intervening treatment following reporting. Mobile phone technology can provide a unique tool for real-time disease reporting. The phone surveillance in this study reported a lower incidence of diarrhea than an in-home survey, possibly because of the absence of intervention and, therefore, a perceived lack of incentive to report. However, this study reports the untapped potential of mobile phones in monitoring infectious disease incidence in a low-income setting.