Severe acute malnutrition (SAM) has been reported to be associated with increased malaria morbidity in Sub-Saharan African children and may affect the pharmacology of antimalarial drugs. This population pharmacokinetic (PK)-pharmacodynamic study included 131 SAM and 266 non-SAM children administered artemether-lumefantrine twice daily for 3 days. Lumefantrine capillary plasma concentrations were adequately described by two transit-absorption compartments followed by two distribution compartments. Allometrically scaled body weight and an enzymatic maturation effect were included in the PK model. Mid-upper arm circumference was associated with decreased absorption of lumefantrine (25.4% decreased absorption per 1 cm reduction). Risk of recurrent malaria episodes (i.e., reinfection) were characterized by an interval-censored time-to-event model with a sigmoid maximum-effect model describing the effect of lumefantrine. SAM children were at risk of underexposure to lumefantrine and an increased risk of malaria reinfection compared with well-nourished children. Research on optimized regimens should be considered for malaria treatment in malnourished children.