This study was conducted in Atali and Garkhera villages of Faridabad district of Haryana to assess the relationship between diarrheal incidence and malnutrition. Two hundred and fifty children in the age group of 6-47 months were followed up for one year from June 1988. History of diarrheal episodes was ascertained by fortnightly home visits. Nutritional status (weight for age) of the children was assessed at the beginning of the study and at every four monthly interval. The mean diarrheal incidence was 2.88 +/- 1.28 episodes per child year. The pre-valence of moderate to severe malnutrition in the children was 35% out of which 8.8% were severely malnourished. Although severely malnourished children had 0.56 more episodes of diarrhea in a year compared to normally nourished, the difference was not statistically significant. Similarly, number of episodes of diarrhea also did not affect the subsequent nutritional status of the children. The possible reason for this could be that in areas of poor sanitary conditions, nutritional status may not play an important role in increasing the susceptibility of children to diarrhea.