Almost half of all childhood deaths worldwide occur in children with malnutrition, predominantly in sub-Saharan Africa and South Asia. This review summarizes the mechanisms by which malnutrition and serious infections interact with each other and with children's environments. It has become clear that whilst malnutrition results in increased incidence, severity and case fatality of common infections, risks continue beyond acute episodes resulting in significant postdischarge mortality. A well established concept of a 'vicious-cycle' between nutrition and infection has now evolving to encompass dysbiosis and pathogen colonization as precursors to infection; enteric dysfunction constituting malabsorption, dysregulation of nutrients and metabolism, inflammation and bacterial translocation. All of these interact with a child's diet and environment. Published trials aiming to break this cycle using antimicrobial prophylaxis or water, sanitation and hygiene interventions have not demonstrated public health benefit so far. As further trials are planned, key gaps in knowledge can be filled by applying new tools to re-examine old questions relating to immune competence during and after infection events and changes in nutritional status; and how to characterize overt and subclinical infection, intestinal permeability to bacteria and the role of antimicrobial resistance using specific biomarkers.