Bangladesh, while remaining a very poor country, made considerable progress in reducing poverty between 2000 and 2005, a period when the national poverty head count rate dropped from 49 percent to 40 percent. What is, however, even more remarkable is that during that time, the extreme poverty rate dropped from 34 percent to 25 percent. In fact, the growth rate in per capita expenditures among the extreme poor population was greater than the growth rates among both the moderate poor population and the non-poor population. The growth in Bangladesh during these five years thus can be considered to be pro-poorest. Even among households that remained extremely poor, various socioeconomic indicators exhibited substantial improvement. A decomposition analysis shows that the rise in expenditure levels resulted more from increases in returns to household characteristics, rather than from changes in household characteristics themselves. In addition, a gradual occupational shift from the agriculture to the non-agriculture sector appears to have played a vital role in the improvement in per capita expenditures.