In malaria holoendemic areas children are anemic, but the exact influence of falciparum malaria on hemoglobin (Hb) concentration remains largely unsettled. Prospective data were therefore collected in children < 24 months of age during five months in a Tanzanian village. Children with mean asymptomatic parasitemia ≥ 400/μl had lower median Hb levels during the study than those with mean density < 400/μl. The difference was 9.7 g/L (95% confidence interval [CI] 2.8-17). In children with one or more clinical malaria episodes, the median Hb was 8.3 g/L (95% CI 0.9-16) lower than those without episode. If early treatment failure was recorded, the immediate effect on Hb was particularly important with a mean drop of 17 g/L. Interestingly, at study-end the Hb concentration represented a function of the area under the parasitemia curve (AUPC) during the previous five months, adjusting for age. In conclusion, stepwise deterioration in median Hb levels was found by asymptomatic parasitemia, clinical malaria episode, and most significantly, treatment failure.