Background Indigenous children in Australia and Alaska have very high rates of chronic suppurative lung disease (CSLD)/bronchiectasis. Antibiotics, including frequent or long-term azithromycin in Australia and short-term beta-lactam therapy in both countries, are often prescribed to treat these patients. In the Bronchiectasis Observational Study we examined over several years the nasopharyngeal carriage and antibiotic resistance of respiratory bacteria in these two PCV7-vaccinated populations. Methods Indigenous children aged 0.5-8.9 years with CSLD/bronchiectasis from remote Australia (n = 79) and Alaska (n = 41) were enrolled in a prospective cohort study during 2004-8. At scheduled study visits until 2010 antibiotic use in the preceding 2-weeks was recorded and nasopharyngeal swabs collected for culture and antimicrobial susceptibility testing. Analysis of respiratory bacterial carriage and antibiotic resistance was by baseline and final swabs, and total swabs by year. Results Streptococcus pneumoniae carriage changed little over time. In contrast, carriage of Haemophilus influenzae declined and Staphylococcus aureus increased (from 0% in 2005-6 to 23% in 2010 in Alaskan children); these changes were associated with increasing age. Moraxella catarrhalis carriage declined significantly in Australian, but not Alaskan, children (from 64% in 2004-6 to 11% in 2010). While beta-lactam antibiotic use was similar in the two cohorts, Australian children received more azithromycin. Macrolide resistance was significantly higher in Australian compared to Alaskan children, while H. influenzae beta-lactam resistance was higher in Alaskan children. Azithromycin use coincided significantly with reduced carriage of S. pneumoniae, H. influenzae and M. catarrhalis, but increased carriage of S. aureus and macrolide-resistant strains of S. pneumoniae and S. aureus (proportion of carriers and all swabs), in a 'cumulative dose-response' relationship. Conclusions Over time, similar (possibly age-related) changes in nasopharyngeal bacterial carriage were observed in Australian and Alaskan children with CSLD/bronchiectasis. However, there were also significant frequency-dependent differences in carriage and antibiotic resistance that coincided with azithromycin use.