Vitamin A deficiency (VAD) is a major nutritional problem in many developing countries. Vitamin A status has been reported to be adversely affected in protein-energy malnutrition (PEM). To assess and compare serum retinol concentrations in hospitalized children with severe PEM and normal ones. A prospective series of 34 malnourished and 29 normal control children, <60 months old, hospitalized at IMIP, Recife-PE were recruited for the study between August 2004 and May 2005. Serum retinol level was assayed by high performance liquid chromatography and concentrations adjusted for presence of inflammation as evidenced by levels of C-reactive protein. Blood retinol level was compared according to nutritional status (severe PEM versus normal), gender, age, maternal schooling, family income, breastfeeding practice, residence and perceived morbidity. The prevalence of low serum retinol (<0.70 micromol l(-1)) was 41.2% in children with severe PEM and 24.1% in normal children. Serum retinol concentrations were lower in children whose mothers had low schooling (p = 0.025) and families with low per capita income (p = 0.049), regardless of their nutritional status. Serum retinol concentrations had similar distribution between children with severe PEM and normal, when adjusted for gender (p > 0.05), age (p > 0.05), maternal schooling (p > 0.05), family income (p > 0.05), breastfeeding practice (p > 0.05) and residence (p > 0.05). However, malnourished children with diarrhoea showed lower serum retinol concentrations (p = 0.021) compared to those without diarrhoea. VAD was prevalent in hospitalized children with severe PEM and also among normal ones although in lesser magnitude. Intervention for prevention and control of deficiency of vitamin A are recommended in settings where diarrhea is endemic and there are unfavorable socio-economical conditions.