Purpose Immunoparalysis defined by prolonged monocyte human leukocyte antigen DR depression is associated with adverse outcomes in adult severe sepsis and can be reversed with granulocyte macrophage colony-stimulating factor (GM-CSF). We hypothesized that immunoparalysis defined by whole-blood ex vivo lipopolysaccharide-induced tumor necrosis factor-alpha (TNFα) response <200 pg/mL beyond day 3 of multiple organ dysfunction syndrome (MODS) is similarly associated with nosocomial infection in children and can be reversed with GM-CSF. Methods In study period 1, we performed a multicenter cohort trial of transplant and nontransplant multiple organ dysfunction syndrome (MODS) patients (≥2 organ failure). In study period 2, we performed an open-label randomized trial of GM-CSF therapy for nonneutropenic, nontransplant, severe MODS patients (≥3 organ failure) with TNFα response <160 pg/mL. Results Immunoparalysis was observed in 34% of MODS patients ( n  = 70) and was associated with increased nosocomial infection (relative risk RR 3.3, 95% confidence interval 1.8–6.0 p  < 0.05) and mortality (RR 5.8 2.1–16 p  < 0.05). TNFα response <200 pg/mL throughout 7 days after positive culture was associated with persistent nosocomial infection, whereas recovery above 200 pg/mL was associated with resolution of infection ( p  < 0.05). In study period 2, GM-CSF therapy facilitated rapid recovery of TNFα response to >200 pg/mL by 7 days ( p  < 0.05) and prevented nosocomial infection (no infections in seven patients versus eight infections in seven patients) ( p  < 0.05). Conclusions Similar to in adults, immunoparalysis is a potentially reversible risk factor for development of nosocomial infection in pediatric MODS. Whole-blood ex vivo TNFα response is a promising biomarker for monitoring this condition.