The study was conducted to assess the prevalence of and factors associated with haemoglobin (Hb) concentrations among children aged 6–59 months in Timor-Leste. The 2003 Demographic and Health Survey was a multi-stage cluster survey of 4,320 households from four different geographic regions in Timor-Leste. In total, 4,514 children aged 6–59 months were included in the analysis. The prevalence of anaemia (Hb concentration <11.0g/dL) was 38.2% (638/1,668) for children aged 6–23 months and 22.6% (644/2,846) for older children (p<0.001). Girls had a higher mean Hb concentration than boys (11.9g/dL vs 11.7g/dL, p<0.006) and children who had diarrhoea in the previous two weeks had a lower Hb concentration than children without diarrhoea (11.5g/dL vs 11.9g/dL, p<0.001). Children from the richest and middle-class households had a lower average Hb concentration than those from the poorest households (11.8g/dL, 11.7g/dL vs 12.0g/dL, p<0.001). Children of mothers with some secondary or more education had a lower mean Hb concentration than children of mothers with completed primary, some primary and no education (11.7 g/dL vs 11.9 g/dL, 11.8 g/dL, and 11.9 g/dL, p=0.002). Children from severely-anaemic mothers had a lower mean Hb concentration than children from moderately-, mild and not anaemic mothers (10.5 g/dL vs 11.1 g/dL, 11.6 g/dL, 12.0 g/dL, p<0.001). After backward stepwise hierarchical multiple regression, wasting, male sex, recent diarrhoea, household wealth index (richest and middle-class), maternal educational status (some secondary or more and some primary), and maternal anaemic status were significantly associated with a lower Hb concentration in children and increased age of child and duration of breastfeeding (6 months) with a higher Hb concentration. Anaemia-prevention programmes among children in Timor-Leste should focus on those children aged less than two years, children with recent diarrhoea, wasted children, high socioeconomic status, and anaemic mothers.