Watershed development (WSD) projects—planned for over 100 million ha in semi-arid areas of India—should enhance soil and water conservation, agricultural productivity and local livelihood, and contribute to better nutrition and health. Yet, little is known about the health impacts of WSD projects, especially on nutrition, vector breeding, water quality and the distribution of impacts. We conducted a qualitative study to deepen the understanding on perceived health impacts of completed WSD projects in four villages of Kolar district, India. Field data collection comprised: (i) focus group discussions with local women (n = 2); (ii) interviews (n = 40; purposive sampling) with farmers and labourers, project employees and health workers; and (iii) transect walks. Our main findings were impacts perceived on nutrition (e.g., food security through better crop survival, higher milk consumption from livestock, alongside increased pesticide exposure with expanded agriculture), potential for mosquito larval breeding (e.g., more breeding sites) and through opportunistic activities (e.g., reduced mental stress due to improved water access). Impacts perceived varied between participant categories (e.g., better nutrition in woman-headed households from livelihood support). Some of these findings, e.g., potential negative health implications, have previously not been reported. Our observations informed a health impact assessment of a planned WSD project, and may encourage implementing agencies to incorporate health considerations to enhance positive and mitigate negative health impacts in future WSD projects.