Environmental enteric dysfunction (EED) refers to a subclinical disorder of intestinal function common in tropical countries and in settings of poverty and economic disadvantage. The enteropathy that underlies this syndrome is characterized by mucosal inflammation and villus blunting mediated by T cell activation. Epithelial cell disruption and microbial translocation drive systemic inflammation. EED in young children is associated geographically with growth failure, malnutrition, and greatly impaired responses to oral vaccines, notably rotavirus and poliovirus vaccines. In this review, we describe the pathophysiology of EED and examine the evidence linking EED and oral vaccine failure. This evidence is far from conclusive. Although our understanding of EED is still sketchy, there is limited evidence of disturbed innate immunity, B cell disturbances including aggregation into lymphoid follicles, and autoantibody generation. Pathways of T cell activation and the possibility of dendritic cell anergy, which could help explain oral vaccine failure, require further work.