Introduction-The WHO recommends incorporating psycho-motor and psycho-social stimulation into the management of SAM as it helps recover the psycho-motor and psycho-social deficit and stimulate the malnourished children to regain their appetite more quickly and gain weight faster. Objectives-To determine the effect of Play based Psycho-Motor and Psycho-Social stimulation on development and linear growth in children with SAM and to estimate the prevalence of delayed developmental milestones in SAM. Methods- This prospective study included 130 SAM children of 6 months to 5 years age, play-based psychomotor and psycho-social stimulation was provided. Linear growth and developmental growth were assessed during hospital stay and at 3 months, 6 months follow up and outcome was assessed. Results- Among 130 SAM children, 601.5% were of age group 13-36 months, 60% were male and 40% female, majority belongs to upper lower socioeconomic class (80%). In 8.1% pedal edema present. 91.54% have delayed milestones in at least 1 domain, delayed social personal domain noted in maximum children (66.92%), mean weight was 6.19+/-1.44 kg and mean height 73.3+/-8.4cm at admission. During 6 months follow up maximum improvement noted in fine motor in 76.19% children followed by gross motor in 61.62% children. Mean weight gain after 6months was 2.05+/-0.17 kg and mean height gain was 2.52cm+/-0.14cm. Conclusion- developmental delay is associated with SAM (91.5%) in atleast one domain. Structured play therapy has positive effect on developmental growth and linear growth of SAM children.