Anemia is one of the most common health problems in childhood. Although mild anemia secondary to acute infections has long been recognized, data on its frequency, causal relationship with inflammatory markers and clinical characteristics are limited. This study was conducted to evaluate the frequency and causes of anemia besides its association with infection and relation to CRP as well as the effect of infection on the response to iron therapy in children who were admitted to pediatric outpatient department. There were 742 children between 6 months-14 years of age seen in the Outpatient Department of whom 167 (22 %) were diagnosed to have anemia. The etiology of anemia were as follows in the order of frequency; 84 % iron deficiency, 14 % infection and 1.7 % thalassemia trait. Children who have infection with an elevated CRP level had a higher incidence of anemia (60 %) than those with normal CRP (18 %). Twenty five percent of patients with iron deficiency associated with infection had a false elevation in serum ferritin level and about a half responded to one month oral iron therapy with an > 1gr/dl increase in Hb. In conclusion, our data show that, anemia of acute infection can be distinguished from iron deficiency anemia by normal MCV,MCH and RDW values in assocation with elevated CRP levels.