Background Ensuring good adherence is critical to the success of anti-retroviral treatment (ART). However, in resource-poor contexts, where paediatric HIV burden is high there has been limited progress in developing or adapting tools to support adherence for HIV-infected children on ART and their caregivers. We conducted formative research to assess children's adherence and to explore the knowledge, perceptions and attitudes of caregivers towards children's treatment. Methods All children starting ART between September 2002 and January 2004 (when ART was at cost in Malawi) were observed for at least 6 months on ART. Their adherence was assessed quantitatively by asking caregivers of children about missed ART doses during the previous 3 days at monthly visits. Attendance to clinic appointments was also monitored. In June and July 2004, four focus group discussions, each with 6 to 8 caregivers, and 5 critical incident narratives were conducted to provide complementary contextual data on caregivers' experiences on the challenges to and opportunities of paediatric ART adherence. Results We followed prospectively 47 children who started ART between 8 months and 12 years of age over a median time on ART of 33 weeks (2–91 weeks). 72% (34/47) never missed a single dose according to caregivers' report and 82% (327/401) of clinic visits were either as scheduled, or before or within 1 week after the scheduled appointment. Caregivers were generally knowledgeable about ART and motivated to support children to adhere to treatment despite facing multiple challenges. Caregivers were particularly motivated by seeing children begin to get better; but faced challenges in meeting the costs of medicine and transport, waiting times in clinic, stock outs and remembering to support children to adhere in the face of multiple responsibilities. Conclusion In the era of rapid scale-up of treatment for children there is need for holistic support strategies that focus on the child, the caregiver and the health worker and which are situated within the reality of fragile health systems. The findings highlight the need for cost-free and less complex paediatric ART regimes and culturally appropriate tools to support children's adherence.