Anaemia affects approximately 69 % of Indian children aged 6–12 months, with Fe deficiency (ID) being a common cause. The effectiveness of micronutrient-fortified infant cereal in improving Fe status and neurodevelopment was evaluated in non-anaemic and mildly anaemic Indian infants. An intervention group (IC) enrolled at age 6 months consumed 50 g/d of rice-based cereal providing 3·75 mg Fe/d as ferrous fumarate for 6 months (n 80) and was compared with a matched static cross-sectional control group (CG) without intervention enrolled at age 12 months (n 80). Mean Hb was higher in IC (118·1 (sd 10·2) g/l) v. CG (109·5 (sd 16·4) g/l) at age 12 months (adjusted mean difference: 9·7 g/l; 95 % CI 5·1, 14·3; P < 0·001), while geometric mean serum ferritin tended to be higher (27·0 (–1 sd 13·4, +1 sd 54·4) v. 20·3 (–1 sd 7·5, +1 sd 55·0) ng/ml); P = 0·085) and soluble transferrin receptor was lower (1·70 (–1 sd 1·19, +1 sd 2·43) v. 2·07 (–1 sd 1·29, +1 sd 3·33) mg/l; P = 0·014). Anaemia (23 v. 45 %; P = 0·007) and ID (17 v. 40 %; P = 0·003) were lower in IC v. CG. Bayley Scales of Infant and Toddler Development Third Edition scores for language (P = 0·003), motor development (P = 0·018), social-emotional (P = 0·004) and adaptive behaviour (P < 0·001), but not cognitive development (P = 0·980), were higher in IC v. CG. No significant difference in anthropometric Z-scores was observed between the groups. Consuming a micronutrient-fortified infant cereal daily for 6 months during complementary feeding promoted better Fe status while reducing the risk for anaemia and ID and was associated with superior neurodevelopmental scores.