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OBJECTIVES: To investigate the consequence of restricting antimalarial treatment to febrile children that test positive to a malaria rapid diagnostic test (MRDT) only in an area of intense malaria transmission. METHODS: Febrile children aged 3-59 months were screened with an MRDT at health facilities in south-west Nigeria. MRDT-positive children received artesunate-amodiaquine (ASAQ), while MRDT-negative children were treated based on the clinical diagnosis of non-malaria febrile illness. The primary endpoint was the risk of developing microscopy-positive malaria within 28 days post-treatment. RESULTS: 309 (60.5%) of 511 children were MRDT-positive while 202 (39.5%) were MRDT-negative at enrolment. 18.5% (50/275) of MRDT-positive children and 7.6% (14/184) of MRDT-negative children developed microscopy-positive malaria by day 28 post-treatment (ρ = 0.001). The risk of developing clinical malaria by day 28 post-treatment was higher among the MRDT-positive group than the MRDT-negative group (adjusted OR 2.74; 95% CI, 1.4, 5.4). A higher proportion of children who were MRDT-positive at enrolment were anaemic on day 28 compared with the MRDT-negative group (12.6% vs. 3.1%; ρ = 0.001). Children in the MRDT-negative group made more unscheduled visits because of febrile illness than those in MRDT-positive group (23.2% vs. 12.0%; ρ = 0.001). CONCLUSION: Restricting ACT treatment to MRDT-positive febrile children only did not result in significant adverse outcomes. However, the risk of re-infection within 28 days was significantly higher among MRDT-positive children despite ASAQ treatment. A longer-acting ACT may be needed as the first-line drug of choice for treating uncomplicated malaria in high-transmission settings to prevent frequent re-infections.