In a peri-urban shanty town located in Lima, Peru, a nutritional census of children 0-3 years old revealed a number of second and third degree malnourished children. In order to treat these children a home-based nutritional rehabilitation (HNR) programme was developed utilizing available community health staff. The programme focused on individual and group maternal education, home-based therapy such as oral rehydration solution for diarrhoea, periodic growth monitoring, and a strong trust relationship between mother and health professional. There was one death and four (7%) hospital admissions among the 54 HNR children. These morbidity and mortality rates were similar to those achieved by more traditional programmes in Bangladesh, India, and Guatemala. NHR can provide an inexpensive, reproducible method useful for the treatment of malnourished 'third world' children in peri-urban slums.