Indigenous Australian children have increased rates of bronchiectasis. Despite a lack of high-level evidence on effectiveness and antibiotic resistance, these children often receive long-term antibiotics. In this study, we determined the impact of recent macrolide (primarily azithromycin) and β-lactam antibiotic use on nasopharyngeal colonisation, lower airway infection (>104CFU/mL of bronchoalveolar lavage fluid culture) and antibiotic resistance in non-typeable Haemophilus influenzae (NTHi), Streptococcus pneumoniae and Moraxella catarrhalis isolates from 104 Indigenous children with radiographically confirmed bronchiectasis. Recent antibiotic use was associated with significantly reduced nasopharyngeal carriage, especially of S. pneumoniae in 39 children who received macrolides [odds ratio (OR)=0.22, 95% confidence interval (CI) 0.08–0.63] and 26 children who received β-lactams (OR=0.07, 95% CI 0.01–0.32), but had no significant effect on lower airway infection involving any of the three pathogens. Children given macrolides were significantly more likely to carry (OR=4.58, 95% CI 1.14–21.7) and be infected by (OR=8.13, 95% CI 1.47–81.3) azithromycin-resistant S. pneumoniae. Children who received β-lactam antibiotics may be more likely to have lower airway infection with β-lactamase-positive ampicillin-resistant NTHi (OR=4.40, 95% CI 0.85–23.9). The risk of lower airway infection by antibiotic-resistant pathogens in children receiving antibiotics is of concern. Clinical trials to determine the overall benefit of long-term antibiotic therapy are underway.