Invasive fungal infections (IFIs) are opportunistic, especially in immunocompromised and hospitalized patients. Children with IFIs are more vulnerable to a fatal outcome. For early diagnosis and treatment, knowledge of the spectrum and frequency of IFIs among children is prerequisite. In this prospective observational study, we enrolled 168 children of 2–59 months old of either sex from March 2018 to December 2019 admitted to the Dhaka hospital, icddr,b. Study participants with suspected IFIs were with or without severe acute malnutrition (SAM) along with sepsis/pneumonia and fulfilled any of the following criteria: (i) failure to respond to injectable antibiotics, (ii) development of a late-onset hospital-acquired infection, (iii) needed ICU care for >7 days, (iv) took steroids/antibiotics for >2 weeks before hospitalization, and (v) developed thrush after taking injectable antibiotics. The comparison group included non-SAM (weight-for-length Z score ≥ −2) children with diarrhea and fever p = 0.013) and had a higher death rate (46.7% vs. 8.9%; p p = 0.042) after adjusting for potential confounders. Our findings thus implicate that, malnourished children with septic shock require targeted screening for the early diagnosis and prompt management of IFIs that may help to reduce IFIs related deaths.