Although over 90% of low birth weight deliveries occur in the developing world, knowledge of its occurrence and consequences are largely based on studies in developed populations. The aim of this investigation was to determine the health consequences of intrauterine growth retardation (IUGR) among an historical cohort of children delivered in a regional hospital located in southwestern Ethiopia. Following a census of all births over a three year period 116 full-term, IUGR and normal birth weight (NBW) matched pairs between 3 and 40 months of age were identified. IUGR children were found to be at elevated risk for moderate to severe malnutrition [relative risk (RR) = 2.26 (1.15,4.43)], frequent illnesses (RR = 1.29 (1.13, 1.46)), and current illness (RR 1.52 (1.10, 2.09)). Catch-up growth among IUGR children did not occur. A steady decline in the growth of NBW children resulted in similar anthropometric outcomes by 2 years of age between the two groups.