Shallow groundwater is the main water source among many alternatives in the Kathmandu Valley, Nepal, which has a rapidly growing population and intermittent piped water supply. Although human pathogens are detected in groundwater, its health effects are unclear. We estimated risk of diarrhoea from shallow groundwater use using quantitative microbial risk assessment. Escherichia coli, Giardia cyst and Cryptosporidium oocyst levels were analysed in dug and tube wells samples. E. coli concentrations were converted to those of enteropathogenic E. coli (EPEC). Risks from EPEC in dug wells and from Cryptosporidium and Giardia in both dug and tube wells were higher than the acceptable limit (<10−4 infections/person-year) for both drinking and bathing exposures. Risk from protozoan enteropathogens increased the total risk 10,000 times, indicating that ignoring protozoans could lead to serious risk underestimation. Bathing exposure considerably increased risk, indicating that it is an important pathway. Point-of-use (POU) water treatment decreased the risk six-fold and decreased risk overestimation. Because removal efficiency of POU water treatment has the largest impact on total risk, increasing the coverage and efficiency of POU water treatment could be a practical risk management strategy in the Kathmandu Valley and similar settings.