This article reports impact and cost results from a health facility-based nutrition education programme targeting children less than 2 years of age in Trujillo, Peru. Key elements of the programme included participative complementary feeding demonstrations, growth monitoring sessions and an accreditation process. Data were collected from six intervention and six control health facilities to measure utilization and costs associated with the intervention. To calculate the unit costs of services, these costs are allocated using activity-based costing. To measure the effects of the intervention, 338 children were followed through household surveys at regular intervals from birth until the age of 18 months. The intervention had a clear positive impact both on the use of nutrition-related services and on children's growth outcomes. Children in the intervention areas made 17.6 visits to health facilities in the first 18 months of life, compared with 14.1 visits for children in the control areas (P<0.001). This pattern holds true for all socioeconomic groups. The intervention prevented 11.1 cases of stunting per 100 children. In multivariate logistic regression analysis, children in the intervention were 0.33 times as likely to be stunted as the controls (P = 0.002). The marginal cost of the intervention - including external costs, training, health education materials and extra travel and equipment - is US$6.12 per child reached and US$55.16 per case of stunting prevented. The estimated marginal cost of the intervention per death averted is US$1952. © The Author 2006. Published by Oxford University Press in association with The London School of Hygiene and Tropical Medicine. All rights reserved.