The prevalence and duration of lactose malabsorption was studied in 64 Central Australian Aboriginal children requiring hospitalization for acute enteritis. Lactose malabsorption was determined by the breath‐hydrogen test. Sixty‐nine per cent were shown to malabsorb lactose, a figure similar to that for well nourished urban European children, hospitalized for acute enteritis. Whereas 90 per cent of the European children became lactose‐tolerant 1 month later, only three of 32 aboriginal children were lactose‐tolerant after 3 months. Lactose malabsorption was also associated with more frequent hospitalizations in affected children. Coronavirus‐like particles were the commonest agent isolated from Aboriginal children. The majority of the Aboriginal children were malnourished (< 80% standard weight for age) which may have been contributed to by their lactose malabsorption and explain why this failed to recover in the same way as European children. The possibility of lactose malabsorption must be taken into consideration when managing Aboriginal children with acute diarrhoeal disease and undernutrition. The use of the breath‐hydrogen test allows an accurate diagnosis of lactose malabsorption to be made in Aboriginal children with diarrhoea so that appropriate dietary management can be instituted.