Experts say "woeful" underfunding and a recruitment and retention crisis have contributed to too many children receiving inappropriate levels of care and education at a crucial development stage.
At the end of March, at least 1,258 three and four-year-olds were being looked after by childcare providers in Lincolnshire rated "inadequate" or "requiring improvement", figures from the education watchdog show.
They include 465 children attending early years settings that received the lowest possible Ofsted grading of "inadequate".
It means seven percent of the three and four-year-olds who have places at Government-funded facilities in Lincolnshire were cared for by negatively-rated institutions or childminders.
The largest proportion of children their age (64 percent) attend settings inspectors rated "good" while 18 percent enjoy "outstanding" care in the area.
In addition to those, there are other youngsters attending settings that do not currently have an Ofsted rating.
The figures cover all providers that receive funding giving children of that age 15 free hours of care and early education for up to 38 weeks a year. They include 4,515 children of working families, who are entitled to an additional 15 hours under the Government's tax-free childcare scheme.
Families can use their allocation of hours at providers including childminders, private and school nurseries and pre-schools.
Jo Kavanagh, assistant director for children's services at Lincolnshire County Council, said: "Lincolnshire has over 700 early years registered providers and of those the majority are good or outstanding. These include private, voluntary and independent settings.
"Lincolnshire's Early Years and Childcare Support Service (EYCC) works with all early years and childcare providers to ensure the council meets its duties regarding the delivery of high-quality childcare, early education and children's centre provision across the county.
"The service offers support and guidance along with access to training opportunities to all pre-schools, nurseries, day care settings, registered childminders, schools, academies and out of school clubs across Lincolnshire. Targeted support packages are offered to any provider that is less than good, and the majority of providers work closely with us to ensure and sustain improvement.
"Currently, there are two Lincolnshire providers that are deemed 'inadequate' by Ofsted. However, both settings have since had an interim visit by Ofsted and have received letters of satisfaction that the provider has met the actions raised. It's important to note that it doesn’t change their current grade until re-inspection.
"EYCC meets regularly and works in partnership with Ofsted to ensure the children of Lincolnshire are able to access high-quality childcare provision."
Across England, the vast majority of children attended "good" or "outstanding" facilities in March but there were more than 71,000 cared for in settings that "require improvement" and over 21,500 looked after by "inadequate" providers.
Ofsted's Gill Jones said the majority of nurseries and childminders were doing a brilliant job, but added: "There are still too many children attending provision that isn't good enough.
"The early years are absolutely crucial to children’s learning, development and care, and we want to see every child get the best start in life."