We describe a programme for the prevention of mother-to-child transmission (PMTCT) of HIV that provided universal antiretroviral therapy (ART) to all pregnant women regardless of the CD4 lymphocyte count and formula feeding for children with high risk of HIV transmission through breastfeeding in a district of India. The overall rate of HIV transmission was 3.7%. Although breastfeeding added a 3.1% additional risk of HIV acquisition, formula-fed infants had significantly higher risk of death compared to breastfed infants. The cumulative 12-month mortality was 9.6% for formula-fed infants versus 0.68% for breastfed infants. Anthropometric markers (weight, length/height, weight for length/height, body mass index, head circumference, mid-upper arm circumference, triceps skinfold, and subscapular skinfold) showed that formula-fed infants experience severe malnutrition during the first two months of life. We did not observe any death after rapid weaning at 5-6 months in breastfed infants. The higher-free-of HIV survival in breastfed infants and the low rate of HIV transmission found in this study support the implementation of PMTCT programmes with universal ART to all HIV-infected pregnant women and breastfeeding in order to reduce HIV transmission without increasing infant mortality in developing countries.