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To determine the efficacy of home-based therapy with ready-to-use food (RTUF) in producing catch-up growth in malnourished children and to compare locally produced RTUF with imported RTUF for this purpose.After a brief inpatient stabilization, 260 children with severe malnutrition were enrolled and systematically allocated to receive home therapy with either imported, commercially produced RTUF or locally produced RTUF. Each child received 730 kJ/kg/day and was followed up fortnightly. Children completed the study when they reached a weight-for-height Z score > −0.5 (WHZ), relapsed, died, or failed to achieve WHZ > −0.5 after 16 weeks. Analyses were stratified by human immunodeficiency virus (HIV) status.78% of all children reached WHZ > −0.5, 95% of those with HIV-negative status and 59% of those with HIV-positive status. Eighty percent of those receiving locally produced RTUF and 75% of those receiving imported RTUF reached WHZ > −0.5. The difference between recovery rates was 5% (95% confidence interval [CI], −5–15%). The rate of weight gain was 0.4 g/kg/day (95% CI, −0.6, 1.4) greater among children receiving locally produced RTUF. The prevalence of diarrhea reported by mothers was 3.7% for locally produced RTUF and 4.3% for imported RTUF. After completion of home therapy and resumption of habitual diet for 6 months, 91% of all children maintained a normal WHZ.Home-based therapy with RTUF was successful in affecting complete catch-up growth. In this study, locally produced and imported RTUF were similar in efficacy in treating of severe childhood malnutrition.