Despite the potential for improving iron status and child growth in low- and middle-income settings, concerns on the safety of high iron dosages of Micronutrient Powders (MNP currently limit their applicability in programs. We examined the effectiveness and risks of an integrated complementary feeding program with low iron dose (6 mg/serving) MNP among 6–23-month-old Ethiopian children using a quasi-experimental study design comparing children from five intervention districts (n = 1172) to those from four matched non-intervention districts (n = 1137). Haemoglobin concentrations increased in intervention and decreased in non-intervention children (group-difference +3.17 g/L), but without improvement in iron stores. Intervention children were 2.31 times more likely to have diarrhoea and 2.08 times more likely to have common cold and flu, but these differences decreased towards the end of the intervention. At end line, intervention children had higher mean Height-for-Age Zscore (HAZ) and a 51% reduced odds of being stunted compared to non-intervention children. MNP with low iron dose, when provided combined with other Infant and Young Child Feeding (IYCF) interventions, marginally improved haemoglobin status and resulted in a remarkable improvement in linear growth in 6–23-month-old children. These benefits likely outweigh the relatively small increase in the risk of diarrhoea.