This study investigates the incidence of hepatotoxicity in HIV-infected children during anti-retroviral therapy (ART) and the impact of concomitant use of isoniazid preventive therapy. It is a retrospective cohort analysis of HIV-infected children who commenced ART or were followed up between September 1998 and November 2005. Alanine transferase levels were measured at baseline, at 1, 3 and 6 months and then 6 monthly thereafter. Of the 598 children included in the study, 425 were taking ART alone, 73 ART and isoniazid, 39 isoniazid alone and 61 neither isoniazid nor ART. There was no increased risk of hepatotoxicity with ART with or without isoniazid compared to the control group over a 2-year period. Grade 3 or 4 ALT elevations occurred in 19 (3.4%) children, with no cases of fulminant hepatic failure. Severe hepatic events are uncommon in children on ART or isoniazid. There is no increased risk of hepatotoxicity with ART and concurrent isoniazid preventive therapy.