This study was designed to evaluate the indications for ventriculoperitoneal shunting in cases of children with tubercular meningitis, presenting with hydrocephalus. Thirty seven children (less than 18 years of age) of tubercular meningitis with hydrocephalus (TBMH) who underwent ventriculoperitoneal shunting over a three year period (1999 to 2001) were included in the study. Sixteen (43%) children were Palur stage II, 15 (40%) stage III, and 6 (16%) stage IV. Fifteen (40%) children had received antitubercular therapy for less than 4 months and 17 (46%) received therapy for more than 4 months prior to presentation. Five (14%) children had not previously received antitubercular therapy. Shunt related complications occurred in 11 (30%) children and 3 children had undergone revision of the shunt multiple times. Good outcome was seen in 16 (43%) children. Thirteen (35%) had moderate disability and 6 (16%) had severe disability at 3 months of follow up. 62% (n =10) children in grade II had a good outcome compared to 40% (n = 6) in grade III. All six children in grade IV had a poor outcome. 2 children, both having multiple infarcts, died and the remaining 4 were left with severe disability. We recommend shunt placement in all children of grade II and III TBMH as this policy has yielded the best results. For grade IV children external ventricular drainage, followed by shunting if improvement occurs remains the most cost-effective procedure.