Background- PON1 (paraoxonase1) is an HDL-associated enzyme having antioxidant activity. PON1 is synthesized in the liver, and there is decreased activity of PON1 with increased lipid peroxidation. Malnutrition is state of oxidative stress due to overproduction of oxidants, decrease in antioxidant defences or a combination of these factors. As per our search, Studies related to childhood malnutrition and increased oxidant stress have been reported but there is scanty research on correlation of PON1 activity and hydroperoxide levels in Malnourished children Objectives-Present study was carried out to find the effect of malnutrition on changes in PON1 activity, lipid profile and lipid hydroperoxide formation. Material and methods: 30 Malnourished children ( upto 5yrs) and age matched 30 controls were included. Serum arylesterase activity, lipid profile and lipid hydroperoxide were measured. Results: Malnourished children had significantly lower PON1 arylesterase activity (105.33±14.69 V/S 175.23±22.64) lower total cholesterol (89.7±13.61V/S 126±20.19mg/dl), HDL-c (32.35±8.27 V/S 42.66±4.06 mg/dl) and significantly higher TG(180 ±28.03V/S 125±16.63mg/dl) level and hydroperoxide levels. (6.405± 1.361 V/S 2.389± 0.723μM/L). Conclusions: Malnutrition leads to increase in hydroperoxide with decrease in arylesterase activity also increase in triglyceride level explaining in parts the complications of malnutrition.