Iron deficiency anemia (IDA) is a common health problem in Pakistan and persistent diarrhea under two years of age is one of its major reasons. Objectives: To determine the frequency of IDA among children 1-2 years of age and to find its association with persistent diarrhea and parasitic infestation. Methods: In this hospital-based study, 345 children 1-2 years of age visiting OPD of Tehsil Headquarter Hospital, with persistent diarrhea were included. Socio-demographic characteristics of children and their parents collected with the questionnaire while total body iron stores determined by checking Hemoglobin (Hb), Serum Ferritin and Total Iron Binding Capacity (TIBC) in the blood while parasitic infestation was determined by Ova and Cyst in the stool samples. Chi-square test was used to test association. Results: Out of total children, 55.9% children were bottle fed, weaning was started among 97.7% children at the age of 6 months, 44.9% had weight <8 kg, 53.0% children were anemic, had TIBC >450 µg/dl and serum ferritin level <7 ng/ml. The association of IDA with age, gender, mode of feeding, food allergies and vaccination history were significant while it was insignificant with persistent diarrhea and parasitic infestation. Conclusions: Study concluded that IDA was very frequent among children in less than 2 years of age and among contributing factors, lack of beast-feeding and diarrhea are important. Correlation was significant between IDA with age and feeding mode while association was insignificant with persistent diarrhea and parasitic infestation