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The provision of safely managed sanitation in informal settlements is a challenge, especially in schools that require durable, clean, sex-segregated facilities for a large number of children. In informal settlements in Nairobi, school sanitation facilities demand considerable capital costs, yet are prone to breakage and often unhygienic. The private sector may be able to provide quality facilities and services to schools at lower costs as an alternative to the sanitation that is traditionally provided by the government. We conducted a randomized trial comparing private sector service delivery (PSSD) of urine-diverting dry latrines with routine waste collection and maintenance and government standard delivery (GSD) of cistern-flush toilets or ventilated improved pit latrines. The primary outcomes were facility maintenance, use, exposure to fecal contamination, and cost. Schools were followed for one school year. There were few differences in maintenance and pathogen exposure between PSSD and GSD toilets. Use of the PSSD toilets was 128% higher than GSD toilets, as measured with electronic motion detectors. The initial cost of private sector service delivery was USD 2053 (KES 210,000) per school, which was lower than the average cost of rehabilitating the government standard flush-type toilets (USD 9306 (KES 922,638)) and constructing new facilities (USD 114,889 (KES 1,169,668)). The private sector delivery of dry sanitation provided a feasible alternative to the delivery of sewage sanitation in Nairobi informal settlements and might elsewhere in sub-Saharan Africa.