Summary This paper reports the validation of a ‘best-judgement’ standardised questionnaire using guidelines and algorithms developed by an expert working group conducted in Nicaragua between 1995 and 1997. Prospective hospital data, including standardised medical recording of selected signs and symptoms, laboratory and radiographic test results and physician diagnoses were collected for children < 5 years admitted with any serious life-threatening condition in 3 study hospitals. The mothers or caregivers of the children were later traced and interviewed using the ‘best-judgement’ questionnaire. Interviews were completed 1–22 months after admission to hospital for 1115 children (400 who died during the stay in hospital and 715 who were discharged alive). The cause of death or admission to hospital was determined by an expert algorithm applied to hospital data. A similar procedure was used to derive the cause using the answers to questions from interviews. Hospital causes were compared with interview causes and sensitivity and specificity calculated, together with the estimated cause-specific fraction for diarrhoea and pneumonia. Multiple diagnoses were allowed; 378 children in the sample (104 deaths, 274 survivors) had a reference diagnosis of diarrhoeal illness, and 506 (168 deaths, 338 survivors) a reference diagnosis of pneumonia. When results for deaths and survivors in all age groups were combined, the expert algorithms had sensitivity between 86% and 88% and specificity between 81% and 83% for any diarrhoeal illness; and sensitivity between 74% and 87% and specificity between 37% and 72% for pneumonia. Algorithms tested in previous validation studies were also applied to data obtained in this study, and the results are compared. Despite less than perfect sensitivity and specificity, reasonably accurate estimates of the cause-specific mortality and morbidity fractions for diarrhoea were obtained, although the accuracy of estimates in other settings using the same instrument will depend on the true cause-specific fraction in those settings. The algorithms tested for pneumonia did not produce accurate estimates of the cause-specific fraction, and are not recommended for use in community settings.