Children in developing countries who present with malnutrition often have infections, particularly pneumonia, at the time of presentation. We evaluated the initial antibiotic management of 144 Gambian children who presented for the first time with malnutrition and who had clinical or radiologic evidence of pneumonia. They were enrolled in a double blind trial of trimethoprim-sulfamethoxazole vs. chloramphenicol. Most children in the study underwent detailed investigations of bacterial and viral etiology as part of another study. The study drug was administered for a week along with oral metronidazole, vitamins and standardized nutritional therapy. Treatment failure was defined as the need for change to parenteral antibiotics during treatment, failure to respond to a week of treatment with the study drug or relapse during the following 2 weeks. There were no differences between the treatment groups in the clinical indicators of severity, etiology or radiologic findings. Thirty-three children were excluded from the analysis because of tuberculosis, inappropriate enrollment or inadequate follow-up. Of the 111 children remaining, 32 (16 in each arm of the study) failed treatment. Clinical failure was not related to in vitro antimicrobial resistance in the 20 cases in which invasive bacterial isolates were obtained. Those who failed treatment were more likely to have had lower chest wall indrawing and positive bacterial cultures than those who were successfully treated. In an area with infrequent antimicrobial resistance of common respiratory pathogens, oral chloramphenicol and trimethoprim-sulfamethoxazole were equally effective in the initial management of malnourished children with community-acquired pneumonia.