Protein energy malnutrition (PEM) is one of the leading causes of death among children below 5 years in Uganda. It develops after acute childhood illnesses despite children having received treatment from health facilities. This study assessed knowledge and practices of health workers in the diagnosis and management of PEM, which was used to establish missed opportunities to prevent severe acute malnutrition (SAM) in its management. This was a cross sectional descriptive study that used questionnaires and observation of health workers at Health Center IV (HCIV) in Wakiso district, Uganda. The clinical nutrition diagnosis of the children was then obtained. There were 44 health workers that assessed 225 children. Most of the health workers 32 (72.7%) had education in PEM management and over 60% of them knew the forms of PEM, clinical signs of kwashiorkor and marasmus and the factors that predispose to PEM. Health workers did not weigh 56 (24.9%) of the children, 193 (86%) children had no height taken and only 32 (14.2%) had mid upper arm circumference measured. The weight for height of 223 (99.2%) and weight for age of 109 (93%) children was not calculated. Only 38 (16.89%) were examined for edema and 40 (17.78%) for muscle wasting. Health workers diagnosed only 21 (9%) children with malnutrition, while researchers found 94 (31.9%) with malnutrition. Children who missed opportunity to have malnutrition diagnosed at the health facility were 73 (32.9%). The knowledge of health workers on PEM is adequate, but their practice is inadequate. There is missed opportunity to diagnose and manage PEM among children who present with acute illnesses at the health centers, hence missed opportunity to prevent SAM.