Objective: To explore anthropometric indicators and mental development in very-low-income children in the second year of life. Design: Cross-sectional survey. Setting: Low-income areas (income < 20th percentile) in semi-urban Mexico (defined as towns or cities with 2500-50 000 inhabitants). Subjects: Eight hundred and ninety-six children aged 12.5-23.5 months surveyed from September to December 2001. Methods: Questionnaire survey and anthropometric survey of households. Multivariate regression models evaluated differences across age in anthropometry (height-for-age Z-score (HAZ) and weight-for-height Z-score) and cognitive function (Mental Development Index (MDI) of the Bayley Scales of Infant Development) while controlling for socio-economic and parental characteristics. Results: There was a significant decline in HAZ and in age-adjusted MDI score across the second year of life. Although the children showed MDI scores close to the mean, normed US values at 13-14 months, the scores were significantly lower than expected in older children (P < 0.0001), even after controlling for socio-economic status and parental characteristics. At 13-14 months, only 3% of children received scores below 70 (less than minus two standard deviations), whereas by 19-20 months, almost 17% of children were performing below this level. No socio-economic or parental characteristics were significant predictors of HAZ or MDI. Conclusions: Parallel deficits are evident in both height-for-age and cognitive functioning during the second year of life in low-income Mexican infants. The consistency of these growth and development findings further stresses the need for targeted interventions to reduce the vulnerability of low-income Mexican children very early in life.