Children in slums are at high risk of acute malnutrition and death. Cost-effectiveness of community-based management of severe acute malnutrition programmes has been demonstrated previously, but there is limited evidence in the context of urban slums where programme cost structure is likely to vary tremendously. This study assessed the cost-utility of adding a community based prevention and treatment for acute malnutrition intervention to Government of India Integrated Child Development Services (ICDS) standard care for children in Mumbai slums. The intervention is delivered by community health workers in collaboration with ICDS Anganwadi community health workers. The analysis used a decision tree model to compare the costs and effects of the two options: standard ICDS services with the intervention and prevention versus standard ICDS services alone. The model used outcome and cost data from the Society for Nutrition, Education & Health Action's Child Health and Nutrition programme in Mumbai slums, which delivered services to 12,362 children over one year from 2013 to 2014. An activity-based cost model was used, with calculated costs based on programme financial records and key informant interviews. Cost data were coupled with programme effectiveness data to estimate disability adjusted life years (DALYs) averted. The community based prevention and treatment programme averted 15,016 DALYs (95% Uncertainty Interval [UI]: 12,246-17,843) at an estimated cost of $23 per DALY averted (95%UI:19-28) and was thus highly cost-effective. This study shows that ICDS Anganwadi community health workers can work efficiently with community health workers to increase the prevention and treatment coverage in slums in India and can lead to policy recommendations at the state, and potentially the national level, to promote such programmes in Indian slums as a cost-effective approach to tackling moderate and severe acute malnutrition.