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Abstract Background Evidence is needed to understand factors that influence child development and caregiving experiences, especially in marginalized contexts, to inform the development and implementation of early childhood development (ECD) interventions. This study explores caregiving practices for young children in an urban informal settlement with Kenyans and embedded refugees, and identifies factors shaping these caregiving experiences, to inform the design and development of potentially appropriate ECD interventions. Methods A qualitative formative study, which included 14 focus group discussions (n = 125 participants), and 13 key informant interviews was conducted between August and October 2018. Purposive sampling approaches were used to select a diverse range of respondents including caregivers of children below three years of age and stakeholders of Kenyan nationality and refugees. Data were analysed using a thematic approach and the Nurturing Care Framework was used as an interpretative lens. Results There was a fusion of traditional, religious and modern practices in the care for young children, influenced by the caregivers’ culture, and financial disposition. There were mixed views/practices on nutrition for young children. For example, while there was recognition of the value for breastfeeding, working mothers, especially in the informal economy, found it a difficult practice. Stimulation through play was common, especially for older children, but gaps were identified in aspects such as reading, and storytelling in the home environment. Some barriers identified included the limited availability of a caregiver, insecurity, and confined space in the informal settlement, all of which made it difficult for children to engage in play activities. Physical and psychological forms of discipline were commonly mentioned, although few caregivers practiced and recognized the need for using non-violent approaches. Some overarching challenges for caregivers were unemployment or unstable sources of income, and, particularly for refugee caregivers, their legal status. Conclusion These findings point to the interplay of various factors affecting optimal caregiving for young children in an urban informal settlement with Kenyans and refugees. Integrated ECD interventions are needed for such a mixed population, especially those that strive to anchor along caregivers’ social support system, co-designed together with community stakeholders, that ideally focus on parent skills training promoting nurturing care and economic empowerment.