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Background Sulphadoxine-pyrimethamine (SP) a widely used treatment for uncomplicated malaria and recommended for intermittent preventive treatment of malaria in pregnancy, is being investigated for intermittent preventive treatment of malaria in infants (IPTi). High levels of drug resistance to SP have been reported from north-eastern Tanzania associated with mutations in parasite genes. This study compared the in vivo efficacy of SP in symptomatic 6–59 month children with uncomplicated malaria and in asymptomatic 2–10 month old infants. Methodology and Principal Findings An open label single arm (SP) standard 28 day in vivo WHO antimalarial efficacy protocol was used in 6 to 59 months old symptomatic children and a modified protocol used in 2 to 10 months old asymptomatic infants. Enrolment was stopped early (87 in the symptomatic and 25 in the asymptomatic studies) due to the high failure rate. Molecular markers were examined for recrudescence, re-infection and markers of drug resistance and a review of literature of studies looking for the 581G dhps mutation was carried out. In symptomatic children PCR-corrected early treatment failure was 38.8% (95% CI 26.8–50.8) and total failures by day 28 were 82.2% (95% CI 72.5–92.0). There was no significant difference in treatment failures between asymptomatic and symptomatic children. 96% of samples carried parasites with mutations at codons 51, 59 and 108 in the dhfr gene and 63% carried a double mutation at codons 437 and 540. 55% carried a third mutation with the addition of a mutation at codon 581 in the dhps gene. This triple: triple haplotype maybe associated with earlier treatment failure. Conclusion In northern Tanzania SP is a failed drug for treatment and its utility for prophylaxis is doubtful. The study found a new combination of parasite mutations that maybe associated with increased and earlier failure. Trial Registration ClinicalTrials.gov NCT00361114