Background: Higher aerobic fitness in children has many physical and cognitive health benefits and can track into adulthood preventing non-communicable diseases later in life. Data on the levels of aerobic fitness among Indian undernourished children are sparse. Aims and Objectives: The aim of the present study is to perform a field-based study to estimate the levels of aerobic fitness and its determinants among the undernourished Indian children. Materials and Methods: Three hundred clinically healthy children, 50% boys, 710.5 years between the body mass index (BMI) Z score of −3 and 0 were recruited. Their anthropometry, lung function, handgrip strength were determined, and their physical activity levels were ascertained. Their aerobic fitness was estimated using 20-m multistage shuttle run test (20-mMSRT) and modified Harvards step test (MHST). Results: The estimated aerobic fitness levels were 32.25 ± 4.21 and 37.29 ± 5.96 (ml/kg/min) using 20-mMSRT and MHST, respectively. Body composition (fat-free mass), nutritional level (BMI Z scores), and hemoglobin explained 37% and 44% of the variance in whole-body aerobic fitness (ml/min) using 20-mMSRT and MHST, respectively. Gender difference in the predicted aerobic fitness was not apparent in this undernourished group of children. BMI Z scores were positively correlated with the whole-body aerobic fitness among undernourished Indian children. Conclusion: The estimated levels of aerobic fitness among the Indian undernourished children were found to be low for their age. Improvement in nutrition can positively influence on whole-body aerobic fitness among this group of undernourished children.