BACKGROUND: Severe anaemia (SA) is a common reason for hospitalisation of children in sub-Saharan Africa but the extent to which blood transfusion is used appropriately in the management of severe anemia has hitherto remained unknown. We report on the use of blood transfusion in the management of anemic children in two hospitals in Uganda. METHODS: Inpatient records of children 0-5 years of age admitted to Lira and Jinja regional referral hospitals in Uganda were reviewed for children admitted on selected days between June 2016 and May 2017. Data was extracted on the results, if any, of pre-transfusion hemoglobin (Hb) level, whether or not a blood transfusion was given and inpatient outcome for all children with a diagnosis of 'severe anemia'. Qualitative data was also collected from health workers to explain the reasons for the clinical practices at the two hospitals. RESULTS: Overall, 574/2275 (25.2%) of the children admitted in the two hospitals were assigned a diagnosis of SA. However 551 (95.9%) of children assigned a diagnosis of SA received a blood transfusion, accounting for 551/560 (98.4%) of the blood transfusions in the pediatric wards. Of the blood transfusions in SA children, only 245 (44.5%) was given appropriately per criteria (Pre-transfusion Hb ≤ 6 g/dL), while 306 (55.5%) was given inappropriately; (pre-transfusion Hb not done, n = 216, or when a transfusion is not indicated [Hb > 6.0 g/dl], n = 90). SA children transfused appropriately per Hb criteria had lower inpatient mortality compared to those transfused inappropriately, (7 (2.9%) vs. 22 (7.2%), [OR 0.4, 95% CI 0.16, 0.90]). Major issues identified by health workers as affecting use of blood transfusion included late presentation of SA children to hospital and unreliable availability of equipment for measurement of Hb. CONCLUSION: More than half the blood transfusions given in the management of anemic children admitted to Lira and Jinja hospitals was given inappropriately either without pre-transfusion Hb testing or when not indicated. Verification of Hb level by laboratory testing and training of health workers to adhere to transfusion guidelines could result in a substantial decrease in inappropriate blood transfusion in Ugandan hospitals.