Background: An average 8 million Indian children younger than 5 years (under-fives) are severely wasted. Each year approximately 2.3 million deaths among 6–60 months aged children in developing countries are associated with malnutrition, which is about 41% of the total deaths in this age group. Objective: The objective of the study was to compare the efficacy of cereal-based the World Health Organization (WHO) F-75 diet and homogenized toned milk with added sugar in the recovery of presenting complaints and weight gain in severe acute malnutrition (SAM) children in the stabilization phase. Materials and Methods: This clinical effectiveness trial was conducted between March 2016 and August 2017 in the Department of Pediatrics, in a MedicalUniversity, Saifai, Uttar Pradesh. A total of 77 children aged 6–59 months with SAM who were admitted in the pediatric ward for various reasons were included in the study. Patients were randomly allocated to receive either cereal-based F-75 diet (Group I) or homogenized toned milk (Group II). Each child was monitored during the early stabilization phase for improvement in terms of the return of appetite, the start of edema reduction as well as the complete disappearance of edema, vomiting, loose stool, weight gain, clinical duration of hospital stay, and mortality. Data collected from each group were analyzed. Results: No statistically significantdifference was found in the onset of edema reduction, complete disappearance of edema and return of appetite in both groups. Number of vomiting and loose stools per day, on day 4 and day 10, was significantly lower in children fed with homogenized toned milk (Group II). Mean weight gain among patients fed with the WHO F-75 diet (Group I) was higher (8.29±2.77 g/kg/day) as compared to that of Group II (7.31±2.87 g/kg/day) but difference in weight gain among patients of Group I and Group II on day 10 was not statistically significant (p=0.133). Conclusions: As homogenized toned milk avoids problems of quality control and microbial contamination, it may be considered for evaluation in difficult circumstances where standard protocols are not feasible for management of severe malnutrition, especially in developing countries.