Molluscum contagiosum is a common childhood viral skin condition and is increasingly found as a sexually transmitted disease in adults. Current treatment options are invasive, requiring tissue destruction and attendant discomfort. Fifty-three children (mean age 6.3+5.1 years) with the diagnosis of molluscum contagiosum were treated with twice daily topical application of either essential oil of Melaleuca alternifolia (TTO), a combination of TTO and organically bound iodine (TTO-I), or iodine alone. At the end of 30 days, 48 children were available for follow up. A greater than 90% reduction in the number of lesions was observed in 16 of 19 children treated with TTO-I, while 1 of 16 and 3 of 18 children met the same criteria for improvement in the iodine and TTO groups (P<0.01, ANOVA) respectively by intention-to-treat analysis. No child discontinued treatment due to adverse events. The combination of essential oil of M. alternifolia with organically bound iodine offers a safe therapeutic alternative in the treatment of childhood molluscum. Clinical Trial Registry ACTRN12610000984099.