OBJECTIVE: To measure the prevalence and evaluate the risk factors of anemia. METHODS: Cross sectional populational based study of the urban area of Criciuma town, in the state of Santa Catarina, Southern Brazil. The study population was a probabilistic sample of 476 children aged under three years. RESULTS: The prevalence of anemia found in the sample was 60.4% for children aged 0 to 35.9 months according to the Brault-Dubuc criteria and 54% for children aged 6 to 35.9 months according to the OMS criteria. The prevalence of anemia increases with age up to 18 months-old and then decreases. It is less prevalent in families where the father has a higher education level and where there is a higher total family income. Nevertheless, even within the 25% higher income group 40% of the children are anemic. The prevalence of anemia is higher among children living in unfinished and overcrowded houses, where the toilet is not equipped with flush, and among children who have two or more older brothers. It is also higher among teenager mothers (<20 years), and 35 years old or older mothers. The prevalence of anemia is lower among women who had 5 to 9 prenatal visits during pregnancy. Low weight at birth was associated with iron deficiency. The nutritional condition was associated with anemia only according to weight/age criteria. Hospitalizations in the last 12 months were not associated with the disease. In the hierarchical multivariate analysis children age, family income, and crowded house were the only significant variables. Reproductive health history, health service visits, birth weight, breast-feeding, anthropometry, and morbidity did not characterize a risk factor of anemia in the multivariate analysis. CONCLUSIONS: The study makes it evident that social inequality is a strong determinant of anemia. The risk imposed by anemia to children in regard to their health and intellectual development requires immediate action.