The United Nations Children Fund (UNICEF) report attributed the progress in children's mortality rate largely to improvements in healthcare.
UNICEF executive director Ann Veneman said in a statement accompanying the report, however, that "while the data shows considerable progress, much more remains to be done."
The report found that between 1990 and 2004 more than 1.2 billion people gained access to safe drinking water.
Between 1996 and 2000, rates of breastfeeding in developing countries increased markedly, including in seven sub-Saharan African countries which saw a 20 percent increase.
Greater use of insecticide-treated nets has helped control malaria among children, as has increased use of antiretroviral drugs that reduce the risk of the transmission of HIV and AIDS from mothers to infants.
But there were still areas where progress has been slower. More than 500,000 women still die every year, for example, as a result of complications during pregnancy and childbirth, about half of whom die in sub-Saharan Africa.
The study also found an appalling lack of basic sanitation, hygiene and potable water, which contributes to the deaths of more than 1.5 million children each year from diarrhea and related ailments.