OBJECTIVES: To assess the effect of Integrated Management of Childhood Illness (IMCI) relative to routine care on the quality and efficiency of providing care for sick children in first-level health facilities in Tanzania, and to disseminate the results for use in health sector decision-making. DESIGN: Non-randomized controlled trial to compare child health care quality and economic costs in two intervention (>90% of health care workers trained in IMCI) and two comparison districts in rural Tanzania. PARTICIPANTS: For quality measures, all sick children presenting for care at random samples of first-level health facilities; for costs, all national, district, facility and household costs associated with child health care, taking a societal perspective. RESULTS: IMCI training is associated with significantly better child health care in facilities at no additional cost to districts. The cost per child visit managed correctly was lower in IMCI than in routine care settings: $4.02 versus $25.70, respectively, in 1999 US dollars and after standardization for variations in population size. CONCLUSION: IMCI improved the quality and efficiency of child health care relative to routine child health care in the study districts. Previous study results indicated that the introduction of IMCI in these Tanzanian districts was associated with mortality levels that were 13% lower than in comparison districts. We can therefore conclude that IMCI is also more cost-effective than routine care for improving child health outcomes. The dissemination strategy for these results led to adoption of IMCI for nationwide implementation within 12 months of study completion.