Early infant diagnosis (EID) of HIV-1 infection confers substantial benefits to HIV-infected and HIV-uninfected infants, to their families, and to programs providing prevention of mother-to-child transmission (PMTCT) services, but has been challenging to implement in resource-limited settings. In order to correctly inform parents/caregivers of infant infection status and link HIV-infected infants to care and treatment, a 'cascade' of events must successfully occur. A frequently cited barrier to expansion of EID programs is the cost of the required laboratory assays. However, substantial implementation barriers, as well as personnel and infrastructure requirements, exist at each step in the cascade. In this update, we review challenges to uptake at each step in the EID cascade, highlighting that even with the highest reported levels of uptake, nearly half of HIV-infected infants may not complete the cascade successfully. We next synthesize the available literature about the costs and cost effectiveness of EID programs; identify areas for future research; and place these findings within the context of the benefits and challenges to EID implementation in resource-limited settings.