A study conducted among HIV-positive adults in WHO clinical stages 1 and 2 was followed up at Thyolo District Hospital (rural Malawi) to report on: (1) retention and attrition before and while on antiretroviral treatment (ART); and (2) the criteria used for initiating ART. Between June 2008 and January 2009, 1633 adults in WHO stages 1 and 2 were followed up for a total of 282 person-years. Retention in care at 1, 2, 3 and 6 months for those not on ART (n=1078) was 25, 18, 11 and 4% vs. 99, 97, 95 and 90% for patients who started ART (n=555, P=0.001). Attrition rates were 31 times higher among patients not started on ART compared with those started on ART (adjusted hazard ratio, 31.0, 95% CI 22-44). Ninety-two patients in WHO stage 1 or 2 were started on ART without the guidance of a CD4 count, and 11 were incorrectly started on ART with CD4 count > or = 250 cells/mm(3). In a rural district hospital setting in Malawi, attrition of individuals in WHO stages 1 and 2 is unacceptably high, and specific operational strategies need to be considered to retain such patients in the health system.