A longitudinal study of 298 rural Bangladeshi infants found evidence of growth faltering starting at 3 months of age. Anthropometric status declined substantially in the first 2 years of life, with weight-for-height (WHZ) falling from − 0·49 to − 1·75, weight-for-age (WAZ) from − 1·18 to − 2·87 and height-for-age (HAZ) from − 1·00 to − 1·88. Higher concentrations of the acute-phase protein α-1-acid glycoprotein (AGP) and higher gut mucosal damage (as signified by raised lactulose:mannitol (L:M) ratios) were both associated with chronic malnutrition as indicated by poorer HAZ and WAZ scores (P = 0·011 and 0·005 for AGP and 0·039 and 0·019 for L:M ratio, respectively). Higher Hb levels were related to improved z-scores, while elevation of Giardia-specific IgM titre (GSIgM) was associated with poor WAZ and WHZ (P = 0·015 and 0·039, respectively). IgG did not show any significant association with z-scores and the L:M ratio did not correlate with any of the inflammation markers or Giardia infection. The prevalence of geohelminth infections was low (only 4 % in the total study period). However, the level of GSIgM indicated high endemicity of Giardia infection from early in life, although very few cysts were detected from stool samples. These findings suggest that rural Bangladeshi infants are being exposed to high levels of infection with concomitant gut damage and growth faltering.