Objective: To investigate the association between household wealth inequality and childhood under-nutrition. The second aim was to determine whether there is significant neighborhood variation in childhood malnutrition and whether neighborhood variation is explained by health risk factors at the individual-level and community-level. Design: Multilevel logistic regression analysis was applied on 5079 children nested within 171 communities Setting: The 2003 Domestic and Health Survey data from Nigeria Main outcome: Under-five malnutrition: Stunting, underweight, and wasting Main results: The results indicated that the household wealth status had strong negative effects on both stunting and underweight, but not on wasting. The effect was stronger on stunting than on underweight. The odds of stunting decline monotonically with increase in economic status. The relationship remains unchanged when controlling for child's age, sex, birth order, duration of breast-feeding and mother's characteristics (age at childbirth, BMI and education). With household wealth status and other factors controlled, the child's sex, breastfeeding duration, household size, and mothers' education attainment all have statistically significant effects on risk of stunting. Conclusion: The study has demonstrated that household wealth status is an important determinant of chronic childhood malnutrition, and that there is significant neighborhood variation in childhood malnutrition, even after controlling for effects of both individual- and community-level characteristics. These findings have important implications for targeting policy as well as the search for left-out variables that might account for this unexplained variation.