More than one in 10 three-year-olds in England have rotten teeth.
In some parts of the country, as many as half of five-year-olds have decayed, missing or filled teeth.
NICE's new guidelines for England say nurseries and schools should consider introducing supervised tooth-brushing and fluoride varnishing programmes.
Professor Mike Kelly, director of the Centre for Public Health at NICE, said: "Children, as young as three, are being condemned to a life with rotten teeth, gum disease and poor health going into adulthood.
"Many children have poor diets and poor mouth hygiene because there is misunderstanding about the importance of looking after children's early milk teeth and gums," he added.
School tooth-brushing
Nurseries and primary schools should supervise tooth-brushing in areas with a high level of child tooth decay, the advisory body said.
Tooth decay in children and adults is disproportionately higher in disadvantaged areas, as well for vulnerable people, and in some ethnic minorities, NICE said.
After local authorities identify areas that would benefit, free toothbrushes and fluoride toothpaste should be handed out to parents and carers for use at school and at home, it advises.
If a supervised tooth-brushing scheme is not feasible, children's teeth should be painted with fluoride varnish at least twice a year to strengthen teeth, NICE added.
A recent Public Health England survey found that 12 per cent of three-year-olds had suffered from rotten teeth.
In one area - Leicester - 34 per cent of children had tooth decay.
Milk teeth 'don't matter'
Part of the issue is that many parents don't recognise that they should take steps against tooth decay, according to health consultant Mandy Murdoch, who was part of the team that developed the guidelines.
"Many people believe that the health of a child's first teeth does not matter as 'they will fall out anyway'," she said.
"However, severe tooth decay at a young age can have negative consequences in later life."
Rotten teeth, aside from being painful for the child, can lead to higher incidences of oral health problems later in life.
Thousands of children have to undergo general anaesthetic to have teeth out, said Professor Elizabeth Kay, foundation dean for the Peninsula Dental School, Plymouth.
"Around 25,000 young children every year are admitted to hospital to have teeth taken out," she said.
"Given that we know how to prevent dental disease this really should not be happening," Professor Kay added.
Poor oral hygiene in adults has been linked to increased gum disease, tooth loss, and oral cancers.
The British Dental Association said that there were "still unacceptable inequalities which need to be tackled" in people's dental health.
Christopher Allen, chairman of the BDA's dental public health committee, welcomed the NICE guidelines.
However, he added: "It's important that local authorities have access to specialist dental health advice to ensure that the interventions chosen are the most appropriate for the needs of the population."
Christopher added that water fluoridation programmes would be a more efficient means of strengthening people's teeth.
Only around six million people in the UK have access to fluoridated water, the BDA said.