This paper presents the poverty analysis of the 1997-98 Malawi Integrated Household Survey. The analysis developed basic needs poverty lines, using consumption-based measures of welfare to classify households and individuals as poor and nonpoor. Because consumption data were not of uniform quality across sample households, the analysis made adjustments to derive a more accurate assessment of the incidence of poverty across the country. The analysis provides poverty and inequality estimates for Malawi's population. About 65 percent were unable to meet their basic needs, and poverty was deep and pervasive. The distribution of household welfare was closely examined within the context of the Malawi Poverty Reduction Strategy to guide government action in helping poor households improve their own well-being.