Severe acute malnutrition (SAM) is a major public health problem. Mid-upper arm circumference (MUAC) is widely used to admit children to treatment programmes. However, insufficient data supporting MUAC discharge criterion limits its use as a stand-alone tool. Our aim was to evaluate MUAC for monitoring nutritional recovery and discharge. This was a secondary analysis of clinical data from children 6-59 months-old treated for SAM from January 2003 to December 2013 at the Nutritional Rehabilitation Unit in rural Gambia. Weight, weight-for-height z-score (WHZ) and MUAC response to treatment were assessed. Treatment indicators and regression models controlled for admission measurement and age were compared by discharge MUAC and WHZ. Four hundred and sixty-three children with marasmus were included. MUAC, WHZ and weight showed parallel responses to treatment. MUAC≥125 mm as a discharge criterion performed well, showing good prediction of default and referral to hospital, acceptable duration of stay, and a higher absolute MUAC measure compared to WHZ≥-2.00, closely related to lower risk of mortality. MUAC can be used as a standalone tool for monitoring nutritional recovery. MUAC≥125 mm performs well as a discharge criterion; however, follow-up data is needed to assess its safety. Further research is needed on children meeting MUAC discharge criterion but with WHZ≤2.0.