Environmental enteric dysfunction (EED) is a subclinical condition of intestinal inflammation, barrier dysfunction and malabsorption associated with growth faltering in children living in poverty. This study explores association of altered duodenal permeability (lactulose, rhamnose and their ratio) with higher burden of enteropathogen in the duodenal aspirate, altered histopathological findings and higher morbidity (diarrhea) that is collectively associated with linear growth faltering in children living in EED endemic setting. In a longitudinal birth cohort, 51 controls (WHZ > 0, HAZ > -1.0) and 63 cases (WHZ< -2.0, refractory to nutritional intervention) were recruited. Anthropometry and morbidity were recorded on monthly bases up to 24 months of age. Dual sugar assay of urine collected after oral administration of lactulose and rhamnose was assessed in 96 children from both the groups. Duodenal histopathology (n = 63) and enteropathogen analysis of aspirate via Taqman array card (n = 60) was assessed in only cases. Giardia was the most frequent pathogen and was associated with raised L:R ratio (p = 0.068). Gastric microscopy was more sensitive than duodenal aspirate in H. pylori detection. Microscopically confirmed H. pylori negatively correlated with HAZ at 24 months (r = -0.313, p = 0.013). Regarding histopathological parameters, goblet cell reduction significantly correlated with decline in dual sugar excretion (p< 0.05). Between cases and controls, there were no significant differences in the median (25th, 75th percentile) of urinary concentrations (μg/ml) of lactulose [27.0 (11.50, 59.50) for cases vs. 38.0 (12.0, 61.0) for controls], rhamnose [66.0 (28.0, 178.0) vs. 86.5 (29.5, 190.5)] and L:R ratio [0.47 (0.24, 0.90) vs. 0.51 (0.31, 0.71)] respectively. In multivariable regression model, 31% of variability in HAZ at 24 months of age among cases and controls was explained by final model including dual sugars. In conclusion, enteropathogen burden is associated with altered histopathological features and intestinal permeability. In cases and controls living in settings of endemic enteropathy, intestinal permeability test may predict linear growth. However, for adoption as a screening tool for EED, further validation is required due to its complex intestinal pathophysiology.