Age- and sex-based BMI cut-offs are used to define overweight and obesity, but the relationship between BMI and body composition has not been very well studied in children or compared between children of different ethnic groups. Body size and composition in childhood are also influenced by size at birth. Our aim was to compare body size and composition at 2 years in children with different ethnicity and size at birth. We prospectively followed a multi-ethnic cohort of 300 children born with risk factors for neonatal hypoglycaemia (infants of diabetics, large or small at birth or late preterm) to 2 years corrected age. Complete data on weight, height and head circumference and body composition using bioelectrical impedance 24±1 months corrected age were available in 209 children. At birth, compared with European children, Chinese, Indian and other ethnicity children were lighter, and Indian children had smaller head circumferences, but birth lengths were similar in all ethnic groups. At 2 years, Pacific children were heavier and had higher BMI z scores, and Indian children had smaller head circumferences and lower BMI z scores than those from other ethnic groups. However, fat mass and fat-free mass indices were similar in all groups. At median BMI, fat mass:fat-free mass ratio was 23 % lower in Pacific than in Indian children (0·22 v. 0·27, P=0·03). BMI is not a good indicator of adiposity in this multi-ethnic cohort of 2-year-old New Zealand children.