Protein energy malnutrition (PEM) is a global problem. Nearly 150 million children under 5 years in the world and 70-80 million in India suffer from PEM, nearly 20 million in the world and 4 million in India suffer from severe forms of PEM, viz., marasmus, kwashiorkor and marasmic kwashiorkor. The studies in experimental animals in the west and children in developing countries have revealed the adverse effects of PEM on the biochemistry of developing brain which leads to tissue damage and tissue contents, growth arrest, developmental differentiation, myelination, reduction of synapses, synaptic transmitters and overall development of dendritic activity. Many of these adverse effects have been described in children in clinical data, biochemical studies, reduction in brain size, histology of the spinal cord, quantitative studies and electron microscopy of sural nerve, neuro -CT scan, magnetic resonance imaging (MRI) and morphological changes in the cerebellar cells. Longer the PEM, younger the child, poorer the maternal health and literacy, more adverse are the effects of PEM on the nervous system. Just like the importance of nutrients on the developing brain, so are the adverse effects on the child development of lack of environmental stimulation, emotional support and love and affection to the child. When both the adverse factors are combined, the impact is severe. Hence prevention of PEM in pregnant and lactating mothers, breast feeding, adequate home based supplements, family support and love will improve the physical growth, mental development, social competence and academic performance of the child. Hence nutritional rehabilitation, psychosocial and psychomotor development of the child should begin in infancy and continue throughout. It should be at all levels, most important being in family, school, community and various intervention programmes, local, regional and national. Moreover medical students, health personnel, all medical disciplines concerned with total health care and school teachers should learn and concentrate on the developmental stimulation and enrichment of the child.