Disturbances in iron homeostasis are frequently observed in individuals with malaria. To study the effect of malaria and its treatment on iron homeostasis and to provide a mechanistic explanation for observed alterations in iron distribution, we studied the course of the iron regulatory hormone hepcidin in anemic Tanzanian children with febrile Plasmodium falciparum malaria. Before initiation of antimalarial treatment, urinary concentrations of hepcidin were strongly elevated and were associated with iron maldistribution, as was suggested by the presence of hypoferremia and high serum concentrations of ferritin. Antimalarial treatment resulted in a rapid decrease in urinary concentrations of hepcidin and reversal of the hypoferremia. Exploration of regulatory pathways of hepcidin production by analysis of iron, erythropoietic, and inflammatory indices suggested that reduced erythropoietic activity and inflammation stimulated hepcidin production. We conclude that high concentrations of hepcidin explain the observed disturbances in host iron homeostasis associated with malaria and may contribute to malarial anemia and an impaired erythropoietic response to iron supplementation.