Diaper rash can be as mild as a little redness or as severe as bleeding sores. Some babies seem to get it all the time; others hardly ever. Peak diaper rash times are when babies start to eat solid foods, when they sleep through the night in a dirty diaper, and when they are taking antibiotics. The best way to treat it is to prevent it.
Change diapers frequently (immediately if they're messy). Expose your baby's bottom to air as often as you can and light (even a light bulb helps). This is pretty easy when your baby's an infant. In a warm room, put him belly down on a disposable absorbent pad (the kind you sat on in the hospital) or use a waterproof crib pad with a cloth diaper on top of it. Do not leave him alone.
Once your baby is mobile, it is less likely he'll stay put. If it's summer, let him run around bare-bottomed outside. If it's winter, you might consider heating up your bathroom and giving him a little extra naked time after his bath.
It's not necessary to slather on ointment with every diaper change to prevent diaper rash. If you notice a little redness — the first symptoms of diaper rash — begin treating it immediately. Don't just hope it will go away on its own, as it's likely to get worse and become a lot more uncomfortable for your baby and a lot harder for you to treat. Also understand that, left untreated, a simple case of diaper rash can become a yeast infection, which is a lot harder to get rid of than ordinary diaper rash. (A yeast infection typically comes on quickly and intensely, characterized by a bright red rash around the diaper area with small red pimples here and there in the surrounding areas.)
You can let him go au naturel in the house, but be prepared for him peeing on the floor. If that sounds too messy for you and it's warm outside, let him roll around on a towel on the grass. You can also put a cloth diaper down in your stroller, sit your baby on top of it, and go for a long walk.
The AAP recommends that you don't use any baby powders. The concern is that, if inhaled, powder can cause breathing problems and lung damage. If you do use a powder, use the cornstarch-based product sparingly, shake it into your hand (away from the baby), and don't allow it to build up in the neck or groin folds.