The severity of anaemia associated with acute, Plasmodium falciparum malaria and the extent to which haemolysis, bone-marrow suppression, and pre-existent iron deficiency contribute to the anaemia were assessed in 102 Indian children aged 2-12 years. Blood haemoglobin (Hb), plasma unconjugated bilirubin and haptoglobin, serum iron and transferrin concentrations and transferrin saturation, red cell morphology and reticulocyte response were investigated in the patients and in 50 control children. Twenty-three patients with severe anaemia (< 70 g Hb/litre) were investigated further, by bone-marrow biopsy followed by iron staining of sections or touch smears of the biopsy material. There was evidence of haemolysis in the malaria cases: in the peripheral blood smears and the significantly higher plasma concentrations of unconjugated bilirubin, lower plasma concentrations of haptoglobin and lower blood concentrations of Hb than those seen in the controls. Haemoglobin concentration correlated directly with haptoglobin (r = 0.489; P < 0.001) and inversely with unconjugated bilirubin in malaria patients (r = -0.526; P < 0.001) but not in controls (r = -0.140 and -0.061, respectively). Parasitaemia (parasites/microliter) was not significantly correlated with Hb, haptoglobin or unconjugated bilirubin. Compared with the earlier samples, follow-up samples from the patients, collected 2 weeks after discharge from hospital and antimalarial therapy, showed significant increase in Hb, haematocrit, haptoglobin and decreases in both total and unconjugated bilirubin. There was evidence of hypercellularity and mild-moderate erythroid hyperplasia, mainly of normoblastic maturation with adequate reticulocyte response, in the bone-marrow samples from the cases of severe anaemia; dyserythropoiesis was only noticed in one case and no stainable iron was detectable in 17 of the 23 cases. These observations indicate that haemolysis is the prime cause of the anaemia seen in acute falciparum malaria, although destruction of parasitised erythrocytes is not the sole cause of the haemolytic process. Bone-marrow suppression appears to have an insignificant role but pre-existent iron deficiency aggravates the severity of the anaemia.