In developed countries the prevalence of protein-energy malnutrition increases with age and multi-morbidities increase nutritional risk in aged care residents in particular. This paper presents a narrative review of the current literature on the identification, prevalence, associated risk factors, consequences, and management of malnutrition in the residential aged care (RAC) setting. We performed searches of English-language publications on Medline, PubMed, Ovid and the Cochrane Library from January 1, 1990 to November 25, 2015. We found that, on average, half of all residents in aged care are malnourished as a result of factors affecting appetite, dietary intake and nutrient absorption. Malnutrition is associated with a multitude of adverse outcomes, including increased risk of infections, falls, pressure ulcers and hospital admissions, all of which can lead to increased health care costs and poorer quality of life. A number of food and nutrition strategies have demonstrated positive nutritional and clinical outcomes in the RAC setting. These strategies extend beyond simply enhancing the nutritional value of foods and hence necessitate the involvement of a range of committed stakeholders. Implementing a nutritional protocol in RAC facilities that comprises routine nutrition screening, assessment, appropriate nutrition intervention, including attention to food service systems, and monitoring by a multidisciplinary team can help prevent decline in residents’ nutritional status. Food and nutritional issues should be identified early and managed on admission and regularly in the RAC setting.