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Abstract Health system constraints hamper treatment of children with severe acute malnutrition (SAM) in Tanzania. This non-inferiority quasi-experimental study in Bariadi (intervention) and Maswa (control) districts assessed the effectiveness, coverage, and cost-effectiveness of SAM treatment by community health workers (CHWs) compared with outpatient therapeutic care (OTC). We included 154 and 210 children aged 6–59 months with SAM [mid-upper arm circumference (MUAC) < 11.5 cm] without medical complications in the control and intervention districts, respectively. The primary treatment outcome was cure (MUAC ≥ 12.5 cm). We performed costing analysis from the provider’s perspective. The probability of cure was higher in the intervention group (90.5%) than in the control group (75.3%); risk ratio (RR) 1.17; 95% CI 1.05, 1.31 and risk difference (RD) 0.13; 95% CI 0.04, 0.23. SAM treatment coverage was higher in the intervention area (80.9%) than in the control area (41.7%). The cost per child treated was US$146.50 in the intervention group and US$161.62 in the control group and that per child cured was US$161.77 and US$215.49 in the intervention and control groups, respectively. The additional costs per an additional child treated and cured were US$134.40 and US$130.92, respectively. Compared with OTC, treatment of children with uncomplicated SAM by CHWs was effective, increased treatment coverage and was cost-effective.