Although information about seasonality and prevalence of influenza is crucial for development of effective prevention and control strategies, limited data exist on the epidemiology of influenza in tropical countries. To better understand influenza in Nicaragua, we performed a prospective 2-year cohort study of influenza-like illness (ILI) involving 4,276 children, 2–11 years of age, in Managua, during April 2005–April 2007. One peak of ILI activity occurred during 2005, in June–July; 2 peaks occurred during 2006, in June–July and November–December. The rate of ILI was 34.8/100 person-years. A household risk factor survey administered to a subset (61%) of participants identified the following risk factors: young age, asthma, and increasing person density in the household. Influenza virus circulation was confirmed during each ILI peak by laboratory testing of a subset of samples. Our findings demonstrate a high rate of ILI, with seasonal peaks, in children in Nicaragua.