The World Health Organization recommends using weight-for-height Z-score (WHZ) <-3 or Mid-Upper Arm Circumference (MUAC) <115 mm as independent criteria for diagnosing severe wasting. However, there are several challenges in using the WHZ criterion. As a result, the MUAC (and edema)-only approach for identifying children needing treatment for severe wasting has been developed and is being rapidly scaled-up globally, including in Timor-Leste. But previous studies reported that MUAC<115 mm has poor diagnostic accuracy for detecting children with WHZ<-3. The two options being explored globally for improving the identification of these children in MUAC (and edema)-only programming contexts include expanding MUAC cut-off and the combination of the indicators MUAC and Weight-for-Age Z-score (WAZ). This study explored the accuracy for diagnosing severe wasting (WHZ<-3) of these two options in Timor-Leste. We conducted a secondary analysis of data from the 2020 national Timor-Leste Food and Nutrition Survey. We tested the accuracy of various MUAC cut-offs, and predefined case definitions in five age groups (0–5 months, 6–23 months, 24–59 months, 6–59 months, and 0–59 months). We calculated the standard diagnostic test parameters (sensitivity, specificity, Youden Index, and others) and used the Youden Index as the principal criterion for rating the overall level of accuracy. The sample analyzed comprised 11,056 children with complete information on our key variables (anthropometric data, age, and sex), of whom 52.2% were boys. The age groups 0 to 5 months, 6 to 23 months, and 24 to 59 months represented 9.0%, 33.7%, and 57.3% of the sample, respectively. We found that the optimal diagnostic MUAC cut-off varied across the age groups between 117 mm and 142 mm, with the Youden Index remaining < 55% in all the age groups considered. The use of case definitions combing MUAC and WAZ optimized the identification of children with WHZ<-3. The case definition MUAC<130 mm or WAZ<-3 Z-score had the best diagnostic accuracy in all the age groups except for the 0 to 5 months age group for which the case definition MUAC<110 mm or WAZ<-2 Z-score had the highest Youden Index. Our findings show that it is challenging to significantly improve diagnostic accuracy for identifying children with WHZ<-3 by only expanding the MUAC cut-off in under five Timorese children. However, In settings facing challenges in using WHZ, the combination of MUAC and WAZ indicators offers a promising approach. Further research is needed to confirm the effectiveness of the proposed combination of MUAC and WAZ indicators case definitions in a programmatic context in Timor-Leste, and other similar contexts.