It is well known that ill health during early childhood can have deleterious consequences for future developmental outcomes. Furthermore, children growing up in poverty are at risk of experiencing frequent and severe episodes of illness because they are highly exposed to the risk factors associated with catching infectious diseases. Progresa, Mexico's main anti-poverty programme, aims to support and promote parents living in rural areas to invest in children's education, health and nutrition. Poorer unhealthy children in remote rural areas have limited access to health care. This paper investigates whether this rural intervention improved children's health status during its first three years of operation. We examine whether Progresa reduces children's morbidity risks by looking at the changes over time in the incidence of diarrhoea and acute respiratory infections. Additionally, we assess whether there are differential treatment effects according to households' severity of poverty. The analyses of this study have been carried out using longitudinal data from a randomized treatment and control survey. Our results indicate that there is some evidence that Progresa contributes to reducing morbidity rates. We find that for both diseases under study, the Programme effect is mainly due to a decrease in the morbidity risks of children aged between 24 and 59 months. However, the evidence of a Programme effect is stronger for diarrhoea than for respiratory infections.