Background: Almost 25% of all new cases of tuberculosis (TB) worldwide are in India, where drug resistance and low quality of care remain key challenges. Methods: We conducted an observational, cross-sectional study of healthcare providers' knowledge of diagnosis and treatment of TB in rural Bihar, India, from June to September 2012. Using data from vignette-based interviews with 395 most commonly visited healthcare providers in study areas, we scored providers' knowledge and used multivariable regression models to examine their relationship to providers' characteristics. Findings: 80% of 395 providers had no formal medical qualifications. Overall, providers demonstrated low levels of knowledge: 64.9% (95% CI 59.8% to 69.8%) diagnosed correctly, and 21.7% (CI 16.8% to 27.1%) recommended correct treatment. Providers seldom asked diagnostic questions such as fever (31.4%, CI 26.8% to 36.2%) and bloody sputum (11.1%, CI 8.2% to 14.7%), or results from sputum microscopy (20.0%, CI: 16.2% to 24.3%). After controlling for whether providers treat TB, MBBS providers were not significantly different, from unqualified providers or those with alternative medical qualifications, on knowledge score or offering correct treatment. MBBS providers were, however, more likely to recommend referrals relative to complementary medicine and unqualified providers (23.2 and 37.7 percentage points, respectively). Interpretation: Healthcare providers in rural areas in Bihar, India, have low levels of knowledge regarding TB diagnosis and treatment. Our findings highlight the need for policies to improve training, incentives, task shifting and regulation to improve knowledge and performance of existing providers. Further, more research is needed on the incentives providers face and the role of information on quality to help patients select providers who offer higher quality care.