Two hundred and five cases (mean age 13.4, SD 9.5) of persistent diarrhoea (PD) of 14-28 days duration, attending an urban slum clinic and treated according to standard WHO guidelines, were monitored at weekly intervals to obtain an estimate of treatment failure rates and to identify its clinical predictors. Vitamin and micronutrients (daily 2RDA) were additionally provided. Only 9 (8.2%) of 109 children with criteria for hospital care accepted in-patient care. Weight gain was considered inadequate if the daily increment between enrollment and day 7 of follow up was < 10 g at age 0-3 months, < 5 g at 4-6 months, and any weight loss for those older than 6 months. Recovery was considered delayed if diarrhoea ceased 7 days after enrollment. Overall, 28.3% cases had inadequate weight gain and 25.6% had delayed recovery. The non-breast milk calorie intake was 11.2% during infancy and 40.6% at later ages of the recommended intakes. In a logistic regression model, initial watery stool frequency greater than median (adjusted OR 2.30, p = 0.01), age < or = 6 months (adjusted OR 2.24, p = 0.04) and low consumption of micronutrient mixture (adjusted OR 2.62, p = 0.01) were associated with an increased risk of delayed recovery. In a Cox proportional hazards model for time to recovery from diarrhoea, low consumption of the micronutrient mixture and age < or = 6 months reduced the chances of recovery by 29% and 37% respectively. Low consumption of the prescribed micronutrient mixture (adjusted OR 2.21, p = 0.04), fever (adjusted OR 1.91, p = 0.05) and diarrhoea continuing beyond study day 7 (adjusted OR 2.29, p = 0.03) increased the risk of inadequate weight gain. Breast feeding status and animal milk consumption did not influence weight gain or recovery. Due to the low compliance for advised hospitalisation, approaches for care at community level itself need to be evolved. Focus should be on increasing the overall dietary intake and provision of generous but safe amount of micronutrients; our findings do not support need for routine elimination of animal milk. The efficacy of individual micronutrients needs evaluation in controlled trials.