Severe edema in children with nephrotic syndrome (NS) may be associated with volume contraction (VC) or volume expansion (VE). Usually, severe edema in children is treated with intravenous (IV) albumin and diuretics, which is appropriate for VC patients. However, in VE patients, this can precipitate fluid overload. The objective of this study was to evaluate treatment of severe edema in NS with diuretics alone. Thirty NS patients with severe edema were enrolled in this prospective study in two phases. VC was diagnosed based on fractional excretion of sodium (FeNa) <1%. VC patients received IV albumin and furosemide. VE patients received IV furosemide and oral spironolactone. On the basis of phase 1 observations, FeNa <0.2% identified VC in 20 phase 2 patients. All phase 1 patients had FeNa <1%. Phase 1 patients when reanalyzed based on a FeNa cutoff of 0.2%; it was noted that VC patients had higher BUN, BUN/creatinine ratio, urine osmolality, and lower FeNa and urine sodium compared with VE patients. Similar results were observed in phase 2. VC patients had significantly higher renin, aldosterone, and antidiuretic hormone levels. In phase 2, 11 VE patients received diuretics alone and 9 VC patients received albumin and furosemide. There was no difference in hospital stay and weight loss in VC and VE groups after treatment. FeNa is useful in distinguishing VC versus VE in NS children with severe edema. The use of diuretics alone in VE patients is safe and effective.