<jats:title>Abstract</jats:title><jats:sec> <jats:title>Introduction</jats:title> <jats:p>Many low-and middle-income countries (LMICs) have improved health indicators in the past decades, however, there is a differential in outcomes between socioeconomic groups. Systematic analysis of drivers of child nutrition gap between non-poor and poor groups has a policy relevance in Nepal and other countries to make progress towards universal health coverage (UHC). The objective of this paper was to estimate the mean height-for-age z scores (HAZ) gap between under-five children belonging to non-poor and poor groups, divide the gap into components (endowments, coefficients and interaction), and identify the factors that contributed most to each of the component.</jats:p> </jats:sec><jats:sec> <jats:title>Methods</jats:title> <jats:p>Information about 6277 under-five children was extracted from the most recent nationally representative Nepal Multiple Indicator Cluster Survey (MICS) 2019. HAZ was used to assess nutritional status of children. Wealth index was used to categorize children into non-poor and poor. Mean HAZ gap between groups was decomposed using Blinder-Oaxaca technique into components: endowments (group difference in levels of predictors), coefficients (group difference in effects of predictors), and interaction (group difference due to interaction between levels and effects of predictors). Detailed decomposition was carried out to identify the factors that contributed most to each component.</jats:p> </jats:sec><jats:sec> <jats:title>Results</jats:title> <jats:p>There was a significant non-poor and poor gap in nutrition outcome measured in HAZ (0.447; <jats:italic>p</jats:italic> < 0.001) among under-five children in Nepal. The between-group mean differences in the predictors of study participants (endowments) contributed 0.210 (47%) to the gap. Similarly, the between-group differences in effects of the predictors (coefficients) contributed 0.308 (68.8%) towards the gap. The interaction contributed -0.071 (15.8%) towards minimizing the gap. The predictors/variables that contributed most towards the gap due to (i) endowments were: maternal education, province (Karnali, Sudurpaschim, Madhesh), residence (rural/urban), type of toilet facility and ethnic group (Dalit and Muslim); (ii) coefficients were: number of under-five children in family, ethnic group (Dalit and Muslim), type of toilet facility, maternal age and education.</jats:p> </jats:sec><jats:sec> <jats:title>Conclusion</jats:title> <jats:p>Decomposition of the child nutrition gap revealed that narrowing the inequality between wealth groups depends not only on improving the level of the predictors (endowments) in the poor group but also on reducing differential effects of the predictors (coefficients).</jats:p> </jats:sec>