BACKGROUND: WHO guidelines for the treatment of young children with suspected malaria have recently changed from presumptive treatment to anti-malarial treatment guided by a blood slide or malaria rapid diagnostic test (RDT). However, there is limited evidence of the safety of this policy in routine outpatient settings in Africa. METHODS: Children 3-59 months of age with a non-severe febrile illness and no obvious cause were enrolled over a period of one year in a malaria endemic area of Tanzania. Treatment was determined by the results of a clinical examination and RDT result, and blood culture and serum lactate were also collected. RDT-negative children were followed up over 14 days. RESULTS: Over the course of one year, 965 children were enrolled; 158 (16.4%) were RDT-positive and treated with artemether-lumefantrine and 807 (83.4%) were RDT-negative and treated with non-anti-malarial medicines. Compared with RDT-positives, RDT-negative children were on average younger with a lower axillary temperature and more likely to have a history of cough or difficulty in breathing. Six (0.6%) children became RDT-positive after enrollment, all of whom were PCR-negative for Plasmodium falciparum DNA at enrollment. In addition, 12 (1.2%) children were admitted to hospital, one with possible malaria, none of whom died. A bacterial pathogen was identified in 9/965 (0.9%) children, eight of whom were RDT-negative and one was RDT-positive, but slide-negative. Excluding three children with Salmonella typhi, all of the children with bacteraemia were ≤ 12 months of age. Compared to double-read research slide results RDTs had a sensitivity of 97.8% (95% CI 96.9-98.7) and specificity of 96.3% (95% CI 96.3-98.4). CONCLUSIONS: Use of RDTs to direct the use of anti-malarial drugs in young children did not result in any missed diagnoses of malaria although new infections soon after a consultation with a negative RDT result may undermine confidence in results. Invasive bacterial disease is uncommon in children with non-severe illness and most cases occurred in infants with a current fever.