BACKGROUND: It is important to monitor health differentials between population groups to understand how they are generated. Internationally displaced people represent one potentially disadvantaged group. We investigated differentials in mortality between children from former Mozambican refugee and host South African households in a rural sub-district in the north-east of South Africa. METHODS: Open prospective cohort of 30 276 children (80 462 person years of follow-up) followed from 1 January 1992 to 31 October 2000 in Limpopo Province, South Africa. Exposure and outcomes data came from the Agincourt Health and Demographic Surveillance System (DSS). RESULTS: There was no difference in infant mortality between children from former Mozambican refugee households and those from South African homes (adjusted rate ratio [RR] = 1.02, 95% CI: 0.79, 1.32), but mortality levels were higher among former Mozambican refugee children during the next 4 years (adjusted RR = 1.91, 95% CI: 1.50, 2.42). Increased mortality levels were also seen among children from larger households and whose mother died, while children born to mothers aged >40 years or with higher education were at lower risk. Measured maternal, household, and health service utilization characteristics could not explain the difference in mortality between children from former Mozambican refugee and South African households. Former Mozambican refugee children residing in refugee settlements had higher mortality rates than those residing in more established villages. CONCLUSIONS: This study demonstrates higher childhood, but not infant, mortality rates among children from former Mozambican refugee households compared with those from host South African households in rural South Africa. The lack of legal status and lower wealth of many former Mozambican refugees may partly explain this disparity.