Abstract Background To combat the disproportionately higher risk of childhood obesity in Latino preschool-aged children, multilevel interventions targeting physical (in) activity are needed. These require the identification of environmental and psychosocial determinants of physical (in) activity for this ethnic group. The objectives were to examine differences in objectively-measured physical activity and sedentary behavior across objectively-determined types of locations in Latino preschool-aged children; and determine whether the differences in physical activity by location were greater in children of parents with higher neighborhood-safety perceptions and physical activity-supportive parenting practices. Methods An observational field study was conducted in Houston (Texas, USA) from August 2011 to April 2012. A purposive sample of Latino children aged 3–5 years and one of their parents (n = 84) were recruited from Census block groups in Houston (Texas) stratified by objectively-assessed high vs. low traffic and crime safety. Seventy-three children provided valid data. Time spent outdoors/indoors tagged with geographic locations was coded into location types based on objective data collected using Global Positioning Systems units that children wore >8 hr/day for a week. Physical activity parenting practices, perceived neighborhood-safety, and demographics were reported by parents. Time spent in sedentary behavior and moderate-to-vigorous physical activity was measured based on objective data collected using accelerometers (motion sensors) that children wore >8 hr/day for a week. Results The odds of children engaging in moderate-to-vigorous physical activity were 43 % higher when outdoors than indoors (95 % confidence interval: 1.30, 1.58), and the odds of being sedentary were 14 % lower when outdoors compared to indoors (95 % confidence intervals: 0.81, 0.91). This difference depended on parental neighborhood-safety perceptions and parenting practices. Children were most active in parks/playgrounds (30 % of the time spent in moderate-to-vigorous physical activity) and least active in childcare/school settings (8 % of the time spent in moderate-to-vigorous physical activity). Conclusions Objectively-assessed time spent in specific locations is correlated with physical activity and sedentary behavior in Latino preschoolers. Interventions and policies should identify ways to engage Latino preschool-aged children in more physical activity and less sedentary behavior while in childcare, and encourage parents to spend more time with their young children in parks/playgrounds and other safe outdoor places.